BLBG:Gold Trades Near One-Week High in London on Stimulus Speculation
Gold traded near a one-week high in London on speculation the Federal Reserve will announce an expansion of asset purchases.
The dollar fell versus the euro before the Fed concludes its two-day meeting today. The central bank may add Treasury purchases to an existing program that buys $40 billion in mortgage bonds each month. North Korea confirmed it fired a rocket that placed a satellite into orbit, defying international sanctions. UBS AG said it expects record gold prices next year.
“The most important precondition for gold gains is loose monetary policy,” Edel Tully, an analyst at UBS in London, wrote today in a report. “We don’t think gold has priced in a sizable expansion in the Fed’s balance sheet beyond current levels, but we do think that quantitative easing will again loom large in the first half of 2013. This overrides many other potential gold drivers.”
Gold for immediate delivery rose 0.2 percent to $1,713.48 an ounce by 11:11 a.m. in London. It reached $1,717.36 on Dec. 10, the highest since Dec. 3. Gold for February delivery was 0.3 percent higher at $1,714.70 on the Comex in New York.
Gold at the morning “fixing,” used by some mining companies to sell output, increased to $1,712.50 in London from $1,710 yesterday afternoon.
Holdings in gold-backed exchange-traded products fell 1.9 metric tons yesterday from a record to 2,627.4 tons, data compiled by Bloomberg show. Prices are set for a 12th consecutive annual gain as central banks from the U.S. to China pledge more steps to spur economic growth. The metal reached an all-time high of $1,921.15 in September 2011.
The North Korean development followed a failed rocket test in April that embarrassed new leader Kim Jong Un, who has been working to secure his hereditary position since the death of his father a year ago.
Silver for immediate delivery rose 0.4 percent to $33.1125 an ounce. Platinum was little changed at $1,637.93 an ounce. Palladium increased 0.3 percent to $696 an ounce, after reaching $705 on Dec. 10, the highest since Sept. 14.
To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net
To contact the editor responsible for this story: John Deane at jdeane3@bloomberg.net
