Oct. 24 (Bloomberg) -- Gold futures rose to a three-week high on speculation that the Federal Reserve will maintain the pace of monetary stimulus to boost economic growth, spurring demand for the metal as a store of value.
Fed policy makers will delay reducing $85 billion in monthly bond purchases until March, according to the median estimate of 40 economists in a Bloomberg survey last week. The 16-day U.S. government shutdown that started Oct. 1 probably trimmed 0.25 percentage point from fourth-quarter economic growth and cost 120,000 jobs this month, according to Jason Furman, President Barack Obama’s chief economic adviser.
“The stimulus story is lending support to gold,” Frank Lesh, a trader at FuturePath Trading in Chicago, said in a telephone interview. “Worries about the health of the U.S. economy are pushing some to gold.”
Gold futures for December delivery added 1.2 percent to settle at $1,350.30 an ounce at 1:44 p.m. on the Comex in New York. Earlier, prices climbed to $1,352.30, the highest for a most-active contract since Sept. 30.
The precious metal has dropped 19 percent this year, heading for the first annual decline since 2000. Some investors lost faith in the metal amid a rally in U.S. equities and low inflation.
Bullion rose 70 percent from December 2008 to June 2011 as the Fed pumped more than $2 trillion into the financial system.
Silver futures for December delivery gained 0.9 percent to $22.822 an ounce in New York, after touching $22.91, the highest since Sept. 20. Trading was 39 percent below average for the past 100 days, data compiled by Bloomberg showed.
On the New York Mercantile Exchange, platinum futures for January delivery increased 1.2 percent to $1,456.20 an ounce. Palladium futures for December delivery climbed 0.2 percent to $747.80 an ounce on the Nymex.
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