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Gold Advances Most in Two Weeks as Dollar Drop Boosts Demand

Nov. 18 (Bloomberg) -- Gold futures rose the most in two weeks as the dollar dropped, boosting demand for precious metals as alternative investments. Palladium jumped more than 6 percent, and silver was up more than 5 percent.

The greenback fell as much as 0.8 percent against a basket of major currencies. This month, gold reached a record $1,424.30 an ounce, and the dollar touched the lowest level since December after the Federal Reserve announced plans to buy more U.S. debt.

“There is a direct link between how much money the government creates and demand for gold,” Nicholas Brooks, the head of research and investment strategy at ETF Securities Ltd., said today in an interview in New York. “As an alternative investment to the U.S. currency, gold is the primary destination for investors go to.”

Gold futures for December delivery rose $16.10, or 1.2 percent, to settle at $1,353 an ounce at 1:50 p.m. on the Comex in New York. It was the biggest gain for the most-active contract since Nov. 4.

On Nov. 16, the metal touched $1,329, more than $95 below the record. Gold is up 23 percent this year, heading for the 10th annual gain.

“About the only thing we are comfortable stating is that we remain long of gold in non-U.S. dollar terms, and we believe strongly that gold’s correction has run its course,” said Dennis Gartman, an economist and editor of the Suffolk, Virginia-based Gartman Letter.

Silver Forecast

Silver probably will top $30 an ounce in 2011 on demand by investors seeking a protection of wealth, London-based research firm GFMS Ltd. said in a report. The metal will average $19.94 an ounce this year and about $28 next year, GFMS said. the most-active contract on the Comex has averaged $19.129 this year.

Silver futures for December delivery rose $1.323, or 5.2 percent, to $26.834 an ounce. Last week, the metal reached a 30-year high of $29.34. The price gained has 59 percent this year.

Palladium futures for December delivery advanced $40.65, or 6.2 percent, to $695.50 an ounce on the New York Mercantile Exchange. It was the biggest gain since May 21.

Platinum futures for January delivery gained $23, or 1.4 percent, to $1,663.90 an ounce.

To contact the reporters on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net; Yi Tian in New York at ytian8@bloomberg.net;

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

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