Gold rose in London after Federal Reserve Bank of Chicago President Charles Evans said the U.S. central bank should keep steps to boost economic growth, boosting demand for the metal as an alternative to currencies.
Too much austerity too soon could be damaging to near- and medium-term growth, Evans said in Hong Kong today. Bullion rose 70 percent as the Fed bought $2.3 trillion of debt in two rounds of easing from December 2008 through June 2011. The dollar index which compares the U.S. currency against six counterparts fell for a third day. Gold usually moves inversely to the dollar.
“Currencies are playing a role,” Nick Trevethan, senior commodities strategist at Australia & New Zealand Banking Group Ltd., said by phone from Singapore. “The market’s worries about a rollback of QE and tighter U.S. policy are probably overblown,” he said, referring to quantitative easing.
Gold for immediate delivery climbed 0.4 percent to $1,668.59 an ounce by 9:13 a.m. in London. Bullion for February delivery rose 0.5 percent to $1,668.10 on the Comex in New York.
Bullion climbed for a 12th straight year in 2012 as central banks from Europe to the U.S. and China boosted stimulus. Goldman Sachs Group Inc. is recommending “fresh tactical longs in gold” as the U.S. government’s debate on whether to raise the debt ceiling will probably send prices of the metal higher, the bank said in a report dated yesterday.
Silver for immediate delivery climbed 0.9 percent to $30.7425 an ounce. Platinum advanced 0.2 percent to $1,635.90 an ounce and palladium dropped 0.2 percent to $699.50 an ounce.