MW: Gold at best in nearly 7 months on Fed bond plan
Investors keep eye on South Africa’ strikes and impact on platinum
By Claudia Assis and William L. Watts, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold futures on Thursday ended at their highest level in nearly seven months after U.S. Federal Reserve officials detailed another round of large-scale bond purchases to boost the U.S. economy.
Gold for December delivery GCZ2 +2.11% rose $38.40, or 2.2%, to settle at $1,772.10 an ounce on the Comex division of the New York Mercantile Exchange.
The metal had changed hands around $1,728 an ounce moments before the announcement and jumped to as high as $1,756.30 on the news.
The settlement was gold’s highest since late February, and the largest one-day percentage increase since late June. Gains for the week approached 4%.
Fed officials detailed a plan to buy $40 billion of agency mortgage-backed securities each month, starting Friday. The Fed kept in place Operation Twist, under which it sells short-dated debt and reinvests the proceeds in longer-term securities.
Fed officials also extended its pledge to keep interest rates exceptionally low from late 2014 to “at least through mid-2015,” according to the statement.
Gold had struggled for direction in the past two sessions as traders positioned themselves ahead of the decision.
Trading was quiet ahead of the Fed, with some worries that if investors quantitative-easing hopes were foiled gold could lose $20 to $30 per ounce. Much of the hopes were seen as priced in.
Gold benefits from quantitative easing measures as it is viewed as a safe store of value. The metal also benefits from fears of currency debasement when liquidity is added to markets.
Silver and copper futures also saw a boost from the Fed bond-purchase plan, with prices turning higher after the news. Platinum and sister metal palladium added to gains.
Copper for December delivery HGZ2 +1.41% advanced 2 cents, or 0.5%, to settle at $3.71 a pound.
Silver futures SIZ2 +4.23% for the same month gained $1.49, or 4.5%, to $34.78 an ounce.
Platinum for October delivery PLV2 +2.10% rose $29.90, or 1.8%, to settle at $1,679.50 an ounce.
Higher prices for platinum and palladium have been supported by fears of more labor strife in South Africa, the top producer of the two precious metals.
Platinum rallied nearly 3% in the previous session, boosted by the supply concerns. Miners have called for a general strike to start Sunday in the city of Rustenburg, the heart of the platinum mining industry.
Anglo American Platinum Ltd. ZA:AMS -3.23% , platinum’s top producer, suspended operations Wednesday in its Rustenburg mines. Last month, more than 30 people were killed in a confrontation between police and rival union members at a mine owned by Lonmin PLC UK:LMI +1.83% .
December palladium PAZ2 +1.41% gained $9.70, or 1.4%, to $689 an ounce.
Claudia Assis is a San Francisco-based reporter for MarketWatch.
William L. Watts is MarketWatch's European bureau chief, based in Frankfurt. Virginia Harrison in Sydney contributed to this story.
