Gold futures topped $1,700 an ounce for the first time since March on speculation that a sluggish global economy will spur central bankers to boost monetary stimulus, increasing demand for the metal as an inflation hedge.
In August, a U.S. factory index showed contraction for the third straight month, and manufacturing in the euro area shrank more than estimated, suggesting the region’s economy may struggle to avoid a recession in the third quarter. Last month, gold’s jumped 4.5 percent, the most since January.
“Bad economic news is good for gold,” Pratik Sharma, a fund manager at Miami-based Atyant Capital, said in a telephone interview. “People are getting additional confirmation that central banks are ready to unleash more stimulus measures.”
Gold futures for December delivery gained 0.5 percent from Aug. 31 to settle at $1,696 at 1:36 p.m. on the Comex in New York. Earlier, the price reached $1,701.60, the highest for a most-active contract since March 13. Floor trading was closed yesterday for a U.S. holiday.
Federal Reserve Chairman Ben S. Bernanke said on Aug. 31 that the U.S. central bank will provide additional stimulus as needed. The European Central Bank may reveal details of a plan to buy bonds of debt-saddled nations when officials meet on Sept. 6.
Gold surged 70 percent from the end of December 2008 to June 2011 as the Fed kept borrowing costs at a record low and bought $2.3 trillion of debt in two rounds of quantitative easing.
Silver futures for December delivery rose 3.1 percent to $32.411 an ounce on the Comex, after reaching $32.435, the highest since April 13.
On the New York Mercantile Exchange, platinum futures for October delivery advanced 2 percent to $1,567.50 an ounce. Palladium futures for December delivery gained 1.9 percent to $641.45 an ounce.
To contact the editor responsible for this story: Steve Stroth at email@example.com