Gold Prices Rise, Tops $1,400, on U.S. Interest-Rate Outlook; Silver Gains
Gold futures topped $1,400 an ounce on speculation that U.S. borrowing costs will remain low, boosting the appeal of the precious metal as a store of value. Silver also gained.
The Federal Reserve has kept its benchmark interest rate at zero percent to 0.25 percent for two years and may signal more debt purchases to help bolster the U.S. economy. Gold has gained 28 percent this year, reaching a record $1,432.50 on Dec. 7.
“The Fed will leave the door open to additional bond purchases, and Europe’s debt problem will rear its ugly head again,” said Matthew Zeman, a metal trader at LaSalle Futures Group in Chicago. “You’ll see people flocking to gold again.”
Gold futures for February delivery rose $6.30, or 0.4 percent, to settle at $1,404.30 at 1:46 p.m. on the Comex in New York. Earlier, the metal dropped as much as 0.4 percent.
The price will average $1,550 next year, up from a forecast of $1,400, Julien Garran, an analyst at UBS AG, said in a report yesterday. Platinum and palladium are among the bank’s top picks in 2011.
“We expect European debt concerns, continuing implications of quantitative easing and an ongoing safety drive to fuel investor demand,” Garran said. “Absolute faith in fiat currencies remains shaky. Gold is currently behaving as a currency rather than a commodity.”
Silver futures for March delivery rose 16.4 cents, or 0.6 percent, to $29.788 an ounce on the Comex. The price has gained 77 percent this year.
Palladium futures for March delivery advanced $15.75, or 2.1 percent, to $768.20 an ounce on the New York Mercantile Exchange. The metal has surged 88 percent this year.
Platinum futures for January delivery climbed $16.60, or 1 percent, to $1,713.90 an ounce. The commodity is up 17 percent in 2010.
To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.
To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net
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