Gold rose in London as the dollar fell after the Federal Reserve said it will purchase more debt, boosting demand for an alternative investment. Silver climbed to a 30-year high and palladium reached a nine-year high. The dollar slipped to a nine-month low versus the euro after the Fed yesterday said it will buy an additional $600 billion of Treasuries through June to boost the U.S. economy. Gold, which usually moves inversely to the greenback, is trading 1.9 percent below a record $1,387.35 set on Oct. 14. A weakening dollar “is what’s helping gold,” said Jesper Dannesboe, a senior commodity strategist at Societe Generale SA in London. “The quantitative-easing announcement was broadly in line with expectations. The euro-dollar rally could actually help gold revisit the highs again.” Immediate-delivery bullion added $12.32, or 0.9 percent, to $1,360.88 an ounce at 9:23 a.m. in London. The metal for December delivery was 1.7 percent higher at $1,360.50 on the Comex in New York. Futures reached a record $1,388.10 on Oct. 14. Gold, up 24 percent this year, is heading for a 10th annual gain, the longest winning streak since at least 1920. Precious metals have outperformed global equities, Treasuries and most industrial metals this year as central banks maintained low interest rates and governments spent trillions of dollars to spur growth. Most economists surveyed by Bloomberg predicted policy makers would add at least $500 billion to the financial system. The Fed said its purchases will be about $75 billion a month and pledged to keep the benchmark interest rate close to zero for an “extended period.” The central bank will also reinvest as much as $300 billion in proceeds from agency and mortgage debt it holds. Dollar Linkage “Gold’s short-term direction will be linked to the dollar,” UBS AG analyst Edel Tully said today in a report. Medium term, “we remain bullish on gold, with inflation expectations on the rise, low real interest rates, the fear of currency debasement, resilient physical demand and limited scrap sales.” Central bank bullion purchases and demand for a safe- haven asset will also support the metal, she said. Gold assets in exchange-traded products declined for a 14th day yesterday, falling 0.93 metric ton to 2,085.6 tons, according to data compiled by Bloomberg from 10 providers. Holdings reached a record 2,104.65 tons on Oct. 14. Silver for immediate delivery in London gained as much as 1.3 percent to $25.1888 an ounce, the highest price since March 1980. Prices are up 49 percent this year. Silver reached an all- time high of $50.35 in New York in 1980, a year after the Hunt brothers tried to corner the market. Gold-Silver Ratio An ounce of gold bought as little as 53.8501 ounces of silver in London today, the smallest amount since August 2008, before the collapse of Lehman Brothers Holdings Inc. triggered the worst recession since World War II. Palladium advanced 2.7 percent to $663.50 an ounce, the highest price since May 2001. It’s up 63 percent this year. Platinum rose 1.4 percent to $1,729.25 an ounce, the highest level since May 14. Both metals are used mostly to make jewelry and pollution-control devices for cars. To contact the reporter on 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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