By Sarah Turner and Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch)—Gold futures advanced in Asian and European trading hours Friday, building on a prior-day rally triggered by the Federal Reserve’s new easing plans to support the U.S. economy.
Gold for December delivery GCZ2 +0.32% rose $5.50 to $1,777.60 an ounce in electronic trading on the Comex division of the New York Mercantile Exchange on Friday.
The benchmark gold contract had surged $38.40 in regular trading in New York on Thursday to settle at $1.772.10 an ounce, its highest close since late February.
The 2.2% gain was the biggest one-day percentage move for the metal since late June.
Gold advanced in the run-up to the conclusion of the Federal Reserve meeting Thursday, as traders anticipated news that could both weaken the U.S. dollar and stoke inflation expectations.
Gold is viewed as a safe store of value and also benefits from fears of currency debasement.
The Fed said Thursday that it would buy $40 billion of mortgage-backed securities each month until it starts to see the labor market pick up. The U.S. central bank also extended an existing program where it buys long-dated securities and sells short-dated ones, and extended guidance for ultralow interest rates out to 2015.
Metal analysts said that the Fed’s commitment to open-ended asset purchases was particularly supportive for gold.
“The Fed does not have a defined upside limit to securities purchases, except to say that these will continue until the outlook for the labor market improves. If unemployment stays high, this means asset purchases will continue automatically,” said HSBC strategists.
“In addition to providing support to the financial markets and economy, these actions are buoying gold prices,” the strategists said.
The dollar extended losses after the Fed statement, while the euro rose, which the HSBC strategists said also helped strengthen gains. European and Asian stocks were in rally mode as well.
Read: Europe stocks rally after Fed stimulus
Read: Asia stocks rally on Fed
Uncertainty about the path of U.S. fiscal policy, along with rising geopolitical tensions in the Middle East following attacks on U.S. embassies and consulates, are also boosting demand for gold, they said.
Elsewhere in the metals complex, copper for December delivery HGZ2 +3.34% rose 10 cents to $3.83 a pound.
Silver futures for December delivery SIZ2 +0.05% SIZ2 +0.05% declined 1 cent to $34.76 an ounce. “This market is thin, compared to gold, and could be more vulnerable to a price correction,” said the HSBC strategists.
Amid concerns about ongoing labor strikes in South Africa, platinum for October delivery PLV2 +1.30% jumped $19.50 to $1,699 an ounce. Palladium for December PAZ2 +1.76% rose $8.45 to $696.95 an ounce.
Sarah Turner is MarketWatch's bureau chief in Sydney.
Barbara Kollmeyer is an editor for MarketWatch in Madrid.
