Gold Trades Near Record After Fed Statement Triggers Slump in the Dollar

Gold, little changed, may gain after climbing to a record yesterday as the Federal Reserve said it was willing to ease monetary policy further to boost the U.S. economy, sending the dollar to a six-week low.

Bullion for immediate delivery advanced as much as 0.2 percent to $1,289.88 an ounce before trading at $1,287.80 at 11:36 a.m. Melbourne time. The metal reached $1,291 yesterday. Gold for December delivery gained as much as 1.3 percent to $1,290.90, nearing yesterday’s all-time high of $1,292.40.

“It continues to look bullish,” Peter McGuire, managing director at CWA Global Markets Pty, said by phone from Sydney today. “There are more worries about debasing of currencies, printing of money and quantitative easing.”

The Fed will continue to monitor the economic outlook and is “prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate,” the Federal Open Market Committee said yesterday in a statement in Washington.

The U.S. currency continued its decline today to the lowest level since Aug. 6. The dollar traded at $1.3287 per euro as of 11:38 a.m. in Melbourne.

Gold, which often moves counter to the dollar, has advanced 17 percent this year and is heading for its 10th annual gain.

The metal may rise to between $1,350 to $1,400 before the end of the year, CWA’s McGuire said. Economic uncertainty in Europe as well as the U.S. would help support investment-haven demand, he said.

Unemployment Levels

The National Bureau of Economic Research said Sept. 20 that the worst U.S. recession since the 1930s ended in June 2009. Still, unemployment in the U.S. may stay above pre-recession levels until at least 2013, the Organization for Economic Cooperation and Development said in a report the same day.

The Fed has kept its benchmark interest rate at zero percent to 0.25 percent and purchased mortgage-backed securities and Treasuries to help bolster the economy.

Silver for immediate delivery was little changed at $20.9559 an ounce after yesterday advancing to $21.075, the highest level since March 2008.

Platinum climbed 0.4 percent to $1,631.50 an ounce and palladium gained 0.6 percent to $538.25 an ounce.

To contact the reporter on this story: Wendy Pugh in Melbourne at wpugh@bloomberg.net.

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.