By Moming Zhou, MarketWatch NEW YORK (MarketWatch) -- Gold futures rose Wednesday for the first time in five sessions, rallying to above $850 an ounce on expectations that recent global efforts to inject liquidity into the market will push up inflation rates. Gold for December delivery was last up $9, or 1.1%, to $848.50 an ounce on the Comex division of the New York Mercantile Exchange. It rallied to as high as $859.20 earlier. Investors tend to buy gold as a hedge against inflation. "An extraordinary amount of liquidity has been pumped into the system this year," said Peter Grant, senior analyst at USAGOLD. "I anticipate further debasement of all currencies, including the dollar, which will ultimately drive gold prices higher." Analysts have projected gold to surge on rising inflation expectations. But gold's recent trading has repeatedly defied their expectations. Gold was trading little changed in early morning. The precious metal had lost $67 over the previous four sessions. The reason, said Jon Nadler, senior analyst at Kitco Bullion Dealers, might be that investors prefer to hold cash amid the financial crisis. Some investors also have to sell their gold investment in order to meet margin calls in other markets, he added. Gold's volatility also came in line with the uncertainties in global stock markets. After the early week's surge, stock markets in Asia and Europe plunged Wednesday, while U.S. markets also moved lower. See Market Snapshot. Gold exchange-traded funds saw lower demand. Assets in the SPDR Gold Trust, the largest gold ETF, fell to 767.58 tons Tuesday, down from Monday's record of 770.64 tons, according to the latest data from the fund. The SPDR Gold Trust added 1.8% to $83.69 on the New York Stock Exchange. Last week's Commitments of Traders report showed declining speculative interest in betting that gold prices will rise. Speculative long positions, or bets that prices will rise, outnumbered short positions by 111,613 contracts in the week ended Oct. 7, down 6,173, or 5.2%, from the previous week. But the number of net long positions in the week was still 35% higher than a month ago. The Commodity Futures Trading Commission will release this weeks report early next week. In other metals Wednesday, December silver tumbled 64 cents, or 5.8%, to $10.42 an ounce. Copper for December delivery dropped 16.95 cents, or 7.1%, to $2.2250 a pound. January platinum fell $50.90, or 4.9%, to $992.70 an ounce, and December palladium slid $5.90, or 2.9%, to $198.65 an ounce. In spot trading, the London gold-fixing price -- used as a benchmark for gold for immediate delivery -- stood at $848.50 an ounce Wednesday morning local time, up $16 from Tuesday afternoon. On the equities side, the Amex Gold Bugs Index fell 3.2% to 249.59 points. iShares Gold Trust rose 0.4% to $82.60, while the iShares Silver Trust ET fell 5.3% to $10.28. The Market Vectors-Gold Miners ETF dropped 3.5% to $26.43.

Source