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Sept. 13, 2012, 4:05 p.m. EDT

Gold at best in nearly 7 months on Fed bond plan

Investors keep eye on South Africa’ strikes and impact on platinum

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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.

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Gold for December delivery /zigman2/quotes/210039517/delayed GCZ22 -0.33%  rose $38.40, or 2.2%, to settle at $1,772.10 an ounce on the Comex division of the New York Mercantile Exchange.

In electronic trading later Thursday, gold moderated gains, recently trading at $1,768.30 an ounce.

The metal had changed hands around $1,728 an ounce moments before the Fed announcement.

Thursday’s settlement was gold’s highest since late February, and the largest one-day percentage increase since late June. Gains for the week approached 4%, while the metal has gained 5% for the month.

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.

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 is viewed as a potential beneficiary of a third round of Fed quantitative easing.

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 /zigman2/quotes/210059544/delayed HGZ22 +0.97%  advanced 2 cents, or 0.5%, to settle at $3.71 a pound.

Silver futures /zigman2/quotes/210319410/delayed SIZ22 +2.18%  for the same month gained $1.49, or 4.5%, to $34.78 an ounce.

Platinum for October delivery  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. /zigman2/quotes/204578911/delayed ZA:AMS -4.31% , 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 .

December palladium  gained $9.70, or 1.4%, to $689 an ounce.

US : U.S.: Nymex
$ 1,795.20
-5.90 -0.33%
Volume: 1,164
Dec. 2, 2022 2:26p
US : U.S.: Nymex
$ 3.85
+0.04 +0.97%
Volume: 355.00
Dec. 2, 2022 1:28p
US : U.S.: Nymex
$ 23.13
+0.49 +2.18%
Volume: 486.00
Dec. 2, 2022 2:20p
ZA : South Africa
-7,519 -4.31%
Volume: 274,875
Dec. 2, 2022 5:00p
P/E Ratio
Dividend Yield
Market Cap
457.79 billion
Rev. per Employee

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.

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