Gold rose the most in seven weeks on speculation that Europe’s debt crisis will spread, boosting demand for the precious metal as a haven asset. Silver closed at the highest settlement price in 30 years.

German bonds snapped three days of declines after a report showed France’s economic expansion slowed more than estimated in the third quarter. Gold priced in British pounds jumped to a record. Gold has gained 28 percent this year, touching an all-time high of $1,432.50 an ounce on Dec. 7.

“There was movement in the European currencies,” said Frank McGhee, the head dealer at Integrated Brokerage Services in Chicago. “It’s a flight-to-quality into the dollar and the metals.”

Gold futures for February delivery gained $22.70, or 1.6 percent, to settle at $1,405.60 at 1:52 p.m. on the Comex in New York. It was the biggest gain for a most-active contract since Nov. 4.

Gold is headed for the 10th straight annual gain as governments keep borrowing costs low to revive their economies. Gold priced in euros reached an all-time high on Dec. 7 on speculation that Europe’s sovereign-debt crisis will spread.

“Europe’s debt problems will keep a floor under gold prices,” said Matt Zeman, a metals trader at LaSalle Futures Group in Chicago.
Bullish Advice

Dennis Gartman, an economist and the editor of the Suffolk, Virginia-based Gartman Letter, advised clients to buy gold priced in dollars. He had advocated selling euros and other currencies to buy the metal this past year.

“We’ve been well-served being long of gold in non-U.S. dollar terms, and that shall remain our largest exposure, but it is time to gain exposure to gold in dollar terms,” Gartman said in his newsletter today.

The Fed has kept the benchmark lending rate at zero percent to 0.25 percent for two years. The European Central Bank’s main rate has been at 1 percent since May 2009.

Silver futures for March delivery rose $1.068, or 3.7 percent, to $30.323 an ounce on the Comex. That’s the highest closing price since March 13, 1980. Futures touched a record $50.35 in January 1980.

The metal, up 80 percent in 2010, has wider manufacturing uses that gold and rallied with copper as the industrial commodity reached a record today, said McGhee of Integrated.

Silver for immediate delivery may jump to as high as $40 next year, leading gains in the 15 commodities covered in a Bloomberg survey of more than 100 analysts, traders and investors.

Palladium futures for March delivery gained $20.10, or 2.6 percent, to $787.20 an ounce on the New York Mercantile Exchange. The metal reached $790.75, the highest since March 2001. The price is up 93 percent this year.

Platinum futures for April delivery rose $16.20, or 0.9 percent, to $1,757.20 an ounce, up 19 percent this year.

Both palladium and platinum are used for jewelry and pollution-control devices in vehicles.