Dec. 2 (Bloomberg) -- Gold futures rose, capping the biggest weekly advance since October, on speculation that central banks will increase holdings after South Korea bought the precious metal to diversify assets.
The Bank of Korea, owner of the world’s eighth-biggest foreign-exchange reserves, purchased 15 metric tons of gold last month, said Lee Jung, the head of the institution’s investment- strategy team. The metal has climbed 22 percent this year on demand for an alternative to stocks, bonds and currencies.
“South Korea has huge reserves,” Arne Lohmann Rasmussen, the head of rates, foreign-exchange and commodity strategy at Danske Bank A/S, said in a telephone interview from Copenhagen. “When they are buying gold, it’s supportive for the market.”
Gold futures for February delivery climbed 0.7 percent to settle at $1,751.30 an ounce at 1:59 p.m. on the Comex in New York. This week, the price gained 3.7 percent, the most since the period ended Oct. 28.
Central banks are expanding reserves for the first time in a generation as gold heads for the 11th straight annual gain.
Purchases of as much as 450 tons in 2011 may be repeated next year as Asian nations and emerging economies diversify reserves, UBS AG said on Nov. 30. In the third quarter, buying by central banks jumped more than sixfold to 148.4 tons, according to the World Gold Council.
Silver futures for March delivery fell 0.2 percent to $33.686 an ounce on the Comex. The price gained 5.1 percent this week.
On the New York Mercantile Exchange, palladium futures for March delivery rose 2.5 percent to $645.85 an ounce. This week, the metal jumped 13 percent, the most in a year.
Platinum futures for January delivery fell 0.6 percent to $1,548.50 an ounce. The price rose 1 percent this week.
--With assistance from Phoebe Sedgman in Melbourne and Sungwoo Park and Eunkyung Seo in Seoul. Editors: Patrick McKiernan, Steve Stroth
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