Gold futures rose to a record for the third straight day on bets that the dollar will extend a slump, enhancing the allure of the metal as an alternative asset. Silver headed for the biggest monthly gain in 28 years.
The greenback headed for the fifth consecutive monthly decline against a basket of six major currencies. The Federal Reserve signaled this week that borrowing costs will remain at a record low for an extended period. Gold headed for the biggest monthly gain since November 2009.
“The dollar will continue to lose ground for the foreseeable future, so it only makes sense to be invested in precious metals,” said Matthew Zeman, a strategist at Kingsview Financial in Chicago.
Gold futures for June delivery rose $12.80, or 0.8 percent, to $1,544 an ounce at 10:41 a.m. on the Comex in New York. Earlier, the price reached a record $1,545.90. The metal has gained more than 7 percent this month.
Gold for immediate delivery climbed as much as 0.6 percent to an all-time high of $1,544.90.
Assets in the SPDR Gold Trust, the biggest exchange-traded fund backed by gold, have expanded 1.5 percent this month, heading for the biggest gain since August.
“The sinking dollar is driving people to the gold market,” said Lim Han Jo, a Seoul-based trader at Tongyang Futures Co.
The Fed has kept its benchmark lending rate at zero percent to 0.25 percent since December 2008 to stimulate the economy.
“The free-money party is going to continue, and that’s going to drive gold higher,” Zeman of Kingsview said.
Silver futures for July delivery rose $1.139, or 2.4 percent, to $48.68 an ounce. This month, the metal is up 28 percent, poised for the biggest gain since January 1983.
The minimum amount of cash that traders must deposit for speculative positions in silver futures will rise 13 percent to $14,513 per contract after the close of business today, CME Group Inc., the Comex parent, said yesterday. Margins were $4,250 a year ago.
“Silver’s run is related to the rise in gold,” said Michael Cuggino, who helps manage about $12 billion at Permanent Portfolio Funds in San Francisco. “There’s a lot of speculation in silver. Anytime you’ve had a run like silver, you’re going to get a correction.”
Before today, gold rose 31 percent in the past year, and silver more than doubled.
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