Aug. 30 (Bloomberg) -- Gold rose in New York on speculation that the Federal Reserve will ease monetary policy further to stimulate the economy, boosting the appeal of the precious metal as an alternative asset.
“We need to do more,” Chicago Fed President Charles Evans said today in a CNBC interview. Gold has rallied 12 percent this month, touching a record $1,917.90 an ounce on Aug. 23. Prices extended gains in electronic trading today after a statement showed some Fed policy makers favored more aggressive action to stimulate the economy during their meeting on Aug. 9.
“The Fed is telling us they are willing to provide more support for the economy,” Frank Lesh, a trader at FuturePath Trading in Chicago said in a telephone interview. “More free money, the fear of a slowing economy, and a weaker dollar are driving more people into gold.”
Gold futures for December delivery gained $38.20, or 2.1 percent, to settle at $1,829.80 at 2:01 p.m. on the Comex in New York.
Prices gained as much as 2.7 percent in electronic trading after the Fed released minutes of its meeting. A few members of the rate-setting committee “felt that recent economic developments justified a more substantial move” beyond the central bank’s Aug. 9 pledge to keep borrowing costs at a record low until mid-2013.
Bullion is in the 11th year of a bull market, the longest winning streak since at least 1920 in London, as investors seek to diversify away from equities and some currencies. The metal is up 29 percent this year, outperforming global stocks, commodities and Treasuries.
The Fed has kept borrowing costs at a record low since December 2008 to stimulate the economy. Residential real-estate prices fell 4.5 percent in the 12 months through June, according to the S&P/Case-Shiller index of property values released today.
Fed Chairman Ben S. Bernanke refrained from announcing additional stimulus last week at a meeting of central bankers in Jackson Hole, Wyoming.
Gold is not a ‘‘safe harbor,’’ Dennis Gartman, an economist and the editor of the Suffolk, Virginia-based Gartman Letter, said in a report to clients.
‘‘This is hardly a place for frightened capital to flee to,’’ Gartman wrote. ‘‘This is a place where only risk capital should be deployed.’’
Prices had a trading range of more than $300 this month. The metal’s 10-day historical volatility is at 41 percent, the highest since March 2009.
Silver futures for December delivery rose 86.3 cents, or 2.1 percent, to $41.464 an ounce on the Comex.
On the New York Mercantile Exchange, platinum futures for October delivery advanced $28.10, or 1.5 percent, to $1,853.10 an ounce, while palladium futures for December delivery gained $23.55, or 3.1 percent, to $779.30 an ounce.
--With assistance from Nicholas Larkin in London and Phoebe Sedgman in Wellington. Editors: Millie Munshi, Daniel Enoch
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