Oct. 13 (Bloomberg) -- Gold rose to a record in New York and London on speculation that a weakening dollar and faster inflation will boost the appeal of precious metals. Platinum and palladium climbed to the highest prices in more than a year, and silver advanced to its costliest since July 2008.
Bullion, which usually moves inversely to the dollar, is on course for a ninth annual gain after the dollar dropped 6.6 percent this year against a basket of six currencies. Futures reached $1,069.70 an ounce in New York, while spot gold climbed to $1,068.63 in London, surpassing the previous highs on Oct. 8.
“There’s lots of concern about the weakness in the dollar, and this has been driving gold,” Peter Fertig, the owner of Quantitative Commodity Research Ltd. in Hainburg, Germany, said by phone. “The fear that central bank exit strategies will come too late to prevent inflation is giving support to gold.”
December gold futures gained $8.60, or 0.8 percent, to $1,066.10 an ounce on the New York Mercantile Exchange’s Comex division by 8:41 a.m. local time. The metal has advanced 20 percent this year. Immediate-delivery bullion was 0.7 percent higher at $1,065 in London.
Gold rose in the morning “fixing” in London, used by some mining companies to sell production, to a record $1,064.50 an ounce from $1,058.75 at yesterday’s afternoon fixing.
Record U.S. Debt
“As we start to see more evidence of economic recovery, we might see the momentum catalyst push gold higher,” said Darren Heathcote, head of trading at Investec Bank Ltd. in Sydney.
President Barack Obama has increased U.S. marketable debt to a record as he borrows to reignite growth in the world’s biggest economy. That’s boosted speculation increased money supply will debase the currency and spur inflation.
The Federal Reserve has cut its main interest rate almost to zero and backed asset purchases and credit programs to combat the recession. Chairman Ben S. Bernanke is leading plans to buy mortgage-backed securities, federal agency debt and Treasuries.
U.S. consumer prices will expand 1 percent this quarter and 1.9 percent and 1.8 percent in the following two quarters respectively, according to the median estimate of 66 economists surveyed by Bloomberg.
Oil futures, used by some investors as an inflation guide, gained as much as 1.6 percent to $74.47 a barrel today in New York, after climbing 2.1 percent yesterday. The U.S. Dollar Index, which last week dropped to the lowest level in almost 14 months, was 0.3 percent lower today.
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