Gold prices rallied in New York, erasing an earlier decline, after the Federal Reserve said it would buy more U.S. debt. The central bank said it would its mortgage debt by firms in the long-term Treasury securities to reinvest in an attempt to enhance growth. Gold prices have gained 27 percent in the past 12 months, to a record $ 1,266.50 an ounce on June 21, on speculation that record-low borrowing costs and government incentives programs would encourage inflation.
“If the Fed continues to print money to buy more debt, it is positive for gold,” said Michael K. Smith, the president of T & K Futures & Options in Port St. Lucie, Florida. “Gold is going to keep going higher. It is an excellent investment.”
Gold futures for December delivery traded at $ 1,207.60 an ounce at 3:12 p.m. in electronic trading on the Comex in New York.
Earlier, prices fell as much as the dollar climbed 0.8 percent against a basket of six currencies. Before the announcement of the central bank, the December gold contract settled at $ 1198 after the close of regular trading on the Comex 1:30 p.m., a decrease of 0.4 percent. The greenback erased its gains after the Fed release.
Silver futures for September delivery fell 8.4 cents, or 0.5 percent, to $ 18,158 per ounce at the close of regular trading. After the announcement of the Fed, silver rebounded, trading as high as $ 18,475.
Platinum futures for October delivery fell $ 5.90, or 0.4 percent, to $ 1.537 an ounce to settle at the New York Mercantile Exchange. After the announcement of the Fed, the market prices were higher at $ 1,544.50.
Palladium futures for September delivery fell $ 9.05, or 1.9 percent, to close at $ 470.60 per ounce.
Platinum and palladium, used in jewelry and reduce pollution devices in cars, were set for the sixth straight session.
source:bloomberg
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