Gold futures rose to a six-week high after the European Central Bank unexpectedly cut its benchmark interest rate, increasing the appeal of the precious metal as an alternative investment.
The ECB lowered the rate by 25 basis points to 1.25 percent as Italian and Spanish borrowing costs soared after euro-area leaders raised the prospect of Greece exiting the monetary union. Federal Reserve Chairman Ben S. Bernanke signaled that additional monetary stimulus may be needed to lower U.S. unemployment as policy makers projected little acceleration in the economy after last quarter’s pickup.
“The ECB’s move is supporting gold,” James Dailey, who manages $215 million at TEAM Financial Management LLC in Harrisburg, Pennsylvania, said in a telephone interview. “The rhetoric from Bernanke suggests another easing may be coming.”
Gold futures for delivery in December jumped 2.1 percent to settle at $1,765.10 an ounce at 1:37 p.m. on the Comex in New York, climbing the most since Oct. 25. Earlier, the metal reached $1,768.50, the highest for a most-active contract since Sept. 22.
“We are entering a period of more accommodative global central-bank monetary policy, and this boosts the commodity trade in general, but it has a double effect of reducing the attractiveness of various fiat currencies, which benefits gold,” Scott Gardner, the chief investment officer at Verdmont Capital SA in Panama, said in an e-mail.
Gold has jumped 24 percent this year on demand for an alternative to stocks, bonds and currencies.
Silver futures for December delivery advanced 1.6 percent to $34.498 an ounce. The metal has surged 41 percent in the past 12 months.
On the New York Mercantile Exchange, platinum futures for January delivery gained 2.9 percent to close at $1,647 an ounce. Palladium futures for December delivery rose 2.1 percent to $662.10 an ounce, advancing for a second straight day.