Gold rose to a record on bets the Federal Reserve’s stimulus plan to bolster the U.S. economy will erode the value of the dollar, boosting demand for precious metals as alternative assets. Gold futures reached $1,397.70 an ounce as the greenback headed for the second straight weekly decline against a basket of six major currencies. Silver extended a rally to a 30-year high. The Fed said on Nov. 3 it would buy $600 billion in Treasuries through June to spur growth. “Markets are realizing the impact of quantitative easing is a tremendous weakening of the dollar,” said Frank McGhee, the head dealer at Integrated Brokerage Services in Chicago. “Ultimately, the Fed is slugging it out to make our currency as cheap as possible. That’s extremely bullish for gold.” Gold futures for December delivery rose $12.70, or 0.9 percent, to $1,395.80 at 10:49 a.m. on the Comex in New York. Before today, the price climbed 26 percent this year, heading for the 10th straight annual gain. Gold for immediate delivery rose to a record $1,397.35. The Fed’s benchmark lending rate has been zero percent to 0.25 percent since December 2008. Before the latest stimulus announcement, the central bank purchased $1.7 trillion in mortgage-backed securities and Treasuries. “Gold prices may simply continue rising until Fed policy is normalized,” said Tom Pawlicki, an analyst at MF Global Holding Inc. in Chicago. “Eventually, gold will begin to lose out to risk markets like stocks as the prospect of easing decreases.” Silver futures for December delivery rose 84.2 cents, or 3.2 percent, to $26.885 an ounce. Earlier, the price reached $26.90, the highest level for a most-active contract since March 1980. Palladium futures for December delivery gained $21.05, or 3.1 percent, to $695.80 an ounce on the New York Mercantile Exchange. Platinum futures for January delivery rose $16.20, or 0.9 percent, to $1,772.10 an ounce. To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net. To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net.

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