Gold Caps Longest Rally in Six Months Amid Easing Speculation

Gold capped the longest rally in six months as signs of slowing growth in Europe increased speculation that central banks will expand stimulus measures, boosting demand for precious metals as a store of value.

U.K. industrial production unexpectedly fell in January from a month earlier, government data showed today. In February, Bank of England policy makers said they “stand ready” to increase stimulus action to support the recovery. The European Central Bank will maintain its accommodative monetary-policy stance “for as long as necessary,” Jens Weidmann, an ECB council member and head of Germany’s Bundesbank, said in a Bloomberg Television interview today.

“Speculation about new announcements on easing in Europe is supporting gold,” Phil Streible, a senior commodity broker at R.J. O’Brien & Associates, said in a telephone interview.

Gold futures for April delivery climbed 0.9 percent to settle at $1,591.70 an ounce at 1:40 p.m. on the Comex in New York, the fourth straight gain, and the longest rally since Aug. 21.

After 12 straight annual increases, gold has fallen 5 percent this year as mounting confidence that economies are recovering cut haven demand. Prices as much as doubled after central banks, led by the Federal Reserve, started buying more than $3.5 trillion of debt from December 2008 to restore growth.

Holdings in bullion-backed exchange-traded products fell to 2,479.9 metric tons yesterday, the lowest since September, data compiled by Bloomberg show. Credit Suisse Group AG and Barclays Plc say the 12-year rally will peak in 2013 and billionaire George Soros reduced his stake in the biggest ETP by 55 percent in the last quarter.

Silver futures for May delivery rose 1.1 percent to $29.171 an ounce, the biggest advance for a most-active contract since Feb. 25.

On the New York Mercantile Exchange, platinum futures for April delivery fell 0.4 percent to $1,595 an ounce.

Palladium futures for June delivery retreated 0.5 percent to $775.50 an ounce.

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