Gold May Gain From Two-Week High on Fed Monetary Policy

In today's gold news, experts are predicting more gold gains on speculation that the Fed will maintain easy monetary policy which will boost the metal as an alternative investment. Now is the perfect time to buy gold coins before gold prices increase again.

By Nicholas Larkin
March 27, 2012
BusinessWeek

Gold may extend gains from a two- week high in London on speculation the U.S. Federal Reserve will maintain easy monetary policy, boosting demand for the metal as an alternative investment.

Gold jumped 1.7 percent yesterday after Fed Chairman Ben S. Bernanke said that while he’s encouraged by the decline in the unemployment rate, continued accommodative monetary policy will be needed to make further progress. Interest rates are likely to remain low at least through late 2014 to spur growth.

“The possibility of accommodative monetary policy if certain conditions, such as employment, do not improve, is a favorable environment for gold,” said Bayram Dincer, an analyst at LGT Capital Management in Pfaeffikon, Switzerland. “More dollar liquidity from the Fed would decrease the value of the dollar and in this case gold is considered as a valuable currency substitute.”

Bullion for immediate delivery rose 0.2 percent to $1,694.01 an ounce by 11:16 a.m. in London. Prices reached $1,696.45, the highest since March 13, and yesterday closed above the 200-day moving average. Gold for June delivery was 0.5 percent higher at $1,696.30 on the Comex in New York.

Gold at the morning “fixing,” used by some mining companies to sell output, increased to $1,694 an ounce in London from $1,680.25 at yesterday’s afternoon fixing.

The metal is up 8.3 percent this quarter after climbing for the past 11 years. Holdings in bullion-backed exchange-traded products rose 5 metric tons to 2,394.6 tons yesterday, about 0.6 percent below the all-time high set March 13, data compiled by Bloomberg show.

Indian Imports

Indian imports may decline as much as 59 percent to 125 tons in the three months to March 31 as a tax increase curbs sales, the Bombay Bullion Association said yesterday. About 75 percent of jewelry stores were closed for a 10th day yesterday, the All India Gems & Jewellery Trade Federation said.

Silver for immediate delivery rose 0.9 percent to $33.115 an ounce and is up 19 percent this quarter. Palladium was little changed at $668.50 an ounce, for a gain this year of 2 percent. Platinum was 0.8 percent higher at $1,662. It climbed 19 percent this quarter.

To contact the reporters for this story: Nicholas Larkin in London at nlarkin1@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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