Gold Futures Gain in New York as Dollar's Decline Spurs Investor Demand

Gold gained for the first time in three days in New York as a sliding dollar spurred demand for the metal as an alternative asset.

The dollar fell as much as 1.3 percent against a basket of six currencies on speculation that any Federal Reserve program to buy back government assets will debase the U.S. currency. Gold has climbed 7.6 percent since Sept. 1, reaching a record $1,388.10 an ounce on Oct. 14, while the greenback has dropped 6.4 percent.

“How much the Fed eases will matter to the dollar,” said Frank Lesh, a trader at FuturePath Trading in Chicago. “The dollar’s important to metals, and it’s the currency value of the gold that’s driving this market.”

Gold futures for December delivery rose $19.90, or 1.5 percent, to settle at $1,342.50 an ounce at 1:59 p.m. on the Comex in New York. The metal fell 1.2 percent in the previous two sessions.

Estimates for the size of the asset-purchase program range from $1 trillion at Bank of America-Merrill Lynch to $2 trillion at Goldman Sachs Group Inc. Economists at both firms agree the Fed will likely start by announcing a $500 billion plan after policy makers meet on Nov. 2.

Gold has gained 2.5 percent in October and 22 percent in 2010, heading for the 10th straight annual gain.

Silver futures for December delivery rose 47.1 cents, or 2 percent, to $23.875 an ounce on the Comex. The metal has gained 9.4 percent in October and 42 percent in 2010.

Investor Lawsuit

HSBC Holdings Plc and JPMorgan Chase & Co. were accused in an investor’s lawsuit of placing “spoof” trading orders to manipulate silver futures and options prices in violation of U.S. antitrust law.

Joseph Evangelisti, a spokesman for New York-based JPMorgan, and Juanita Gutierrez, a spokeswoman for London-based HSBC, declined to comment.

The Commodity Futures Trading Commission began probing allegations of price manipulation in the silver futures market in September 2008. At a hearing in Washington on Oct. 26, CFTC Commissioner Bart Chilton said there have been “fraudulent efforts to persuade and deviously control” prices and that violators should be prosecuted.

Platinum futures for January delivery rose $13.90, or 0.8 percent, to $1,692 an ounce on the New York Mercantile Exchange, and were up 2 percent this month. The price has gained 15 percent this year.

Palladium futures for December delivery added $10.30, or 1.7 percent, to $629.45 an ounce. The price is up 10 percent in October, heading for the fourth straight monthly gain. Palladium has risen 54 percent in 2010.

To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.

To contact the editor responsible for this story: Patrick McKiernan at pmckiernan@bloomberg.net

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