Gold Rallies on Speculation Fed Debt Purchase to Spur Inflation
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Gold prices rallied in New York, erasing an earlier drop, after the Federal Reserve said it would buy more U.S. government debt.
The central bank said it would reinvest principal payments on its mortgage holdings into long-term Treasury securities in a bid to bolster growth. Gold prices have gained 27 percent in the past 12 months, reaching a record $1,266.50 an ounce on June 21, on speculation that record-low borrowing costs and government stimulus programs would spur inflation.