Gold futures climbed to another record on investor demand for an alternative to the slumping dollar. Silver extended a rally to a 30-year high.
The dollar fell to the lowest level since January against a basket of currencies, partly on speculation that the Federal Reserve will ease monetary policy further to stimulate the U.S. economy. Gold reached an all-time high of $1,322 an ounce. Since Sept. 14, the metal has climbed to a record in 11 sessions.
“Gold is continuing to propel itself higher on the weakness of the dollar,” said Adam Klopfenstein, a senior market strategist at Lind-Waldock, a broker in Chicago. “The Fed now wants to see inflation, and they’re going to step in and prop up the bond market. If you’re a coupon clipper in the bond market, you’re going to want to go with assets with higher returns, like gold.”
Gold futures for December delivery rose $8.20, or 0.6 percent, to settle at $1,317.80 at 1:46 p.m. on the Comex in New York, capping a 1.5 percent gain for this week. In the third quarter, the metal rose 5.1 percent, the eighth straight gain.
Federal Reserve Bank of New York President William Dudley said the outlook for U.S. job growth and inflation is “unacceptable” and that more monetary easing is probably needed to spur the economy and avert deflation.
The central bank has kept its benchmark rate at zero percent to 0.25 percent since December 2008 and purchased Treasuries and mortgage-backed securities to help boost the economy.
More Gains Predicted
Gold may rise 3 percent on more quantitative easing in the U.S., Bank of America-Merrill Lynch said in a report yesterday. The metal gained 8 percent as the U.S. used $1.7 trillion to bolster the economy, and the second round is estimated at $500 billion to $750 billion by the first quarter, the bank said.
Gold, crude oil and other commodities are rising because “inflation is everywhere but in the mind of the Fed,” said Michael Pento, a senior economist at Euro Pacific Capital in New York. The metal will climb to $1,400 this year, he said.
The Fed’s preferred consumer-price measure, which excludes food and fuel, rose 0.1 percent in August from the prior month and was up 1.4 percent from a year earlier, matching the 12-month increase in June and July. The central bank’s long-term projection calls for an increase of 1.7 percent to 2 percent.
“Gold is not at a top yet, and $1,300, the old resistance level, is now a level of support,” Klopfenstein of Lind-Waldock said.
‘Follow the Money’
Gold for immediate delivery in London reached a record $1,320.70. Gold has gained 20 percent this year. The metal headed for the 10th straight annual gain, the longest rally since at least 1920.
“Dips were ultimately viewed as an opportunity to buy” yesterday, Edel Tully, a London-based analyst at UBS AG, said in a report. “In September, the tendency was very much to follow the money. As long as this persists, investors will fear missing out on the next rally.”
Silver futures for December delivery rose 23.9 cents, or 1.1 percent, to $22.06 an ounce on the Comex. Earlier, the metal reached $22.17, the highest level since October 1980. The price gained 3.1 percent this week and surged 17 percent in the third quarter.
Platinum futures for January delivery gained $23.50, or 1.4 percent, to $1,682.10 an ounce on the New York Mercantile Exchange. Earlier, the price reached $1,689.40, the highest level since May 18. Platinum is up 2.2 percent this week and rallied 7.9 percent in the third quarter.
Palladium futures for December delivery advanced $3.65, or 0.6 percent, to $574.90 an ounce. Yesterday, the metal reached $582.65, the highest level since March 2008. The price gained 2.6 percent this week and rallied 29 percent in the third quarter.