Gold Futures Advance on Stimulus Bets, Physical Demand

Gold futures rose on speculation that central banks will maintain stimulus measures, while physical demand for the metal climbed. Silver also advanced.

Federal Reserve Vice Chairman Janet Yellen said yesterday that the U.S. central bank should press on with $85 billion in monthly bond buying. Haruhiko Kuroda, the nominee to be the Bank of Japan (8301) governor, said he would do whatever is needed to end 15 years of deflation. Gold purchases appear widespread across Southeast Asia, Standard Bank Plc said today.

“Yellen’s statement and pro-stimulus chatter in Japan are supporting gold,” Bart Melek, the Toronto-based head of commodity strategy at TD Securities, said in a telephone interview. “Also, physical-related demand has picked up.”

Gold futures for April delivery climbed 0.2 percent to settle at $1,574.90 an ounce at 1:56 p.m. on the Comex in New York. Earlier, the price gained as much as 0.9 percent.

The metal has dropped 6 percent this year. In February, the commodity fell for the fifth straight month, the longest slump since 1997, partly as investors shifted to equities for the prospect of higher returns. The Dow Jones Industrial Average rose to a record today.

Last month, investors sold the most gold ever from exchange-traded products. Assets as of yesterday at 2,500 metric tons have dropped 5 percent from the Dec. 20 record, data compiled by Bloomberg show.

Silver futures for May delivery increased 0.4 percent to $28.604 an ounce on the Comex, the third straight gain. The price has dropped 5.4 percent this year.

On the New York Mercantile Exchange, platinum futures for April delivery gained 1.2 percent to $1,585.70 an ounce. The price dropped in the previous five sessions, the longest slump since Dec. 24.

Palladium futures for June delivery jumped 2.8 percent to $734.60 an ounce, the biggest increase for a most-active contract since Jan. 9.

To contact the reporter on this story: Debarati Roy in New York at droy5@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

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