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Gold Futures Advance on Dollar Outlook, Cap Fourth Straight Weekly Gain
Gold futures rose in New York, capping the fourth straight weekly gain, on speculation that the dollar will weaken, boosting the appeal of the precious metal as an alternative asset.
The dollar fell against the euro after Federal Reserve Chairman Ben S. Bernanke said the U.S. central bank “will do all it can” to ensure a recovery. Gold has gained 13 percent this year, touching a record $1,266.50 an ounce in June.
“If the markets are going to see more quantitative easing, that’s going to weaken the dollar and boost gold prices,” said Matt Zeman, a metals trader at LaSalle Futures Group in Chicago.
Gold futures for December delivery rose 20 cents to settle at $1,237.90 an ounce at 1:37 p.m. on the Comex in New York. The precious metal gained 0.7 percent this week.
The Fed has kept the main interest rate between zero and 0.25 percent since December 2008 to revive the economy. The central bank also has purchased $1.25 trillion in mortgage- backed securities in an effort to push down mortgage rates to support housing.
Gold prices fluctuated between gains and losses during Bernanke’s opening remarks to central bankers from around the world at the Kansas City Fed’s annual monetary symposium in Jackson Hole, Wyoming.
‘Confusion’ Supports Gold
“Investors don’t have a firm grasp of what’s going on with the economy and that breeds confusion and supports gold,” said Adam Klopfenstein, a senior market strategist at Lind-Waldock in Chicago.
Falling asset prices may hurt gold’s advance in the short term, some analysts said. Before today, the Standard & Poor’s 500 Index fell 6.1 percent this year and the Reuters/Jefferies CRB Index of 19 commodities declined 6.8 percent.
“You still have the overhang of a deflationary scenario and that’s going to cap gold’s rally,” said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago.
Earlier, gold rose as much as 0.5 percent after the government said the U.S. economy grew at a 1.6 percent pace in the second quarter, more than the 1.4 percent median forecast of economists surveyed by Bloomberg News. The expansion was lower than last month’s government estimate of 2.4 percent.
U.S. economic data released this month on employment, manufacturing and housing have shown that the pace of growth is easing.
Growth ‘Too Slow’
Bernanke said growth during the past year has been “too slow.”
“The economic data has deteriorated,” said Michael Pento, a senior economist at Euro Pacific Capital Inc. in New York. “That has caused gold investors to prepare for the next round of fiscal and monetary stimulus from D.C.”
Silver futures for December delivery rose 5.2 cents, or 0.3 percent, to $19.074 an ounce on the Comex. The metal rose 5.7 percent this week, the biggest weekly increase since early April, as some investors purchased the metal as a cheaper alternative to gold.
Platinum futures for October delivery fell $2.90, or 0.2 percent, to $1,537 an ounce on the New York Mercantile Exchange, up 1.5 percent for the week. Palladium futures for December delivery rose 35 cents to $504.65 an ounce.
To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.
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