Aug. 11 (Bloomberg) -- Gold declined as the dollar advanced against higher yielding currencies, regaining ground lost after the Federal Reserve said it would buy more bonds. Gold for immediate delivery decreased as much as 0.5 percent to $1,198.50 an ounce before trading at $1,198.65 an ounce at 2:32 p.m. in Singapore. December-delivery futures gained 0.2 percent to $1,200.60 an ounce. “Gold will probably stay range-bound between $1,175 and $1,225,” said Wallace Ng, executive director with ABN Amro NV in Hong Kong. “The market is not likely to pick up momentum on the Fed’s debt purchase plan although short-covering may continue to prevent a sharp fall in gold prices.” Short- covering is a trade that reverses previous bets for a decline in the price of a security. The Dollar Index, which gauges the strength of the U.S. currency against six major counterparts, jumped as much as 0.7 percent today. Gold typically moves inversely to the dollar. The Fed said yesterday it would reinvest principal payments on its mortgage holdings into long-term Treasury securities in a bid to bolster growth. Gold prices have gained 9.4 percent this year, reaching a record $1,265.30 an ounce on June 21, as investors sought protection against Europe’s financial turmoil and economic uncertainties. Inflationary Concerns Record-low borrowing costs and government stimulus programs would spur inflation, helping to fuel demand for gold as a store of value, said Ong Yi Ling, an investment analyst with Phillip Futures Pte. Inflation in China quickened to 3.3 percent in July, the fastest in 21 months, boosted by rising food costs, data showed today. In June, prices rose 2.9 percent. The government aims to limit full-year inflation to 3 percent. “Gold is well supported by long-term inflationary concerns after the shift in policy by the Federal Reserve,” Singapore-based Ong said. “Gold is likely to build a base” above $1,190 before continuing on its longer-term uptrend. Gold holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, were unchanged at 1,282.75 metric tons yesterday, according to figures on the company’s website. Silver for immediate delivery shed 0.7 percent to $18.1925 an ounce and platinum declined 0.2 percent to $1,541 an ounce, while palladium dropped 0.5 percent to $473.75 an ounce. --Editors: Jarrett Banks, Richard Dobson To contact the reporter on this story: Kyoungwha Kim in Singapore at kkim19@bloomberg.net To contact the editor responsible for this story: Jim Poole at jpoole4@bloomberg.net

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