Bloomberg News

Gold Climbs on Draghi’s Euro Pledge, U.S. Stimulus Speculation

July 26, 2012

Gold rose for a second day after the European Central Bank president said policy makers will do whatever is needed to preserve the euro and amid increasing expectations of further stimulus measures in the U.S.

“To the extent that the size of these sovereign premia hamper the functioning of the monetary policy transmission channel, they come within our mandate,” ECB President Mario Draghi said today. Orders for U.S. durable goods excluding the transportation category unexpectedly dropped 1.1 percent in June, the most in five months, a Commerce Department report showed, boosting speculation that the Federal Reserve will step up measures to stabilize growth.

“Prices are up today because of what we heard from Draghi and as investors are getting more confident that some form of easing will be announced in U.S.,” Jeffrey Christian, the managing director at New York-based CPM Group Inc., said in a telephone interview.

Gold futures for December delivery advanced 0.4 percent to settle at $1,619.80 an ounce at 1:39 p.m. on the Comex in New York. Prices have gained 3.4 percent this year.

UBS AG said there was “some physical buying” of gold from Europe this week, while the amounts have been “quite small” so far, according to a report e-mailed today.

The metal surged 70 percent from the end of December 2008 to June 2011 as the Fed kept borrowing costs at a record low and bought $2.3 trillion of debt in two rounds of so-called quantitative easing. Policy makers are scheduled to announce a rate decision on Aug. 1.

Silver futures for September delivery fell 0.1 percent to $27.446 an ounce in New York.

On the New York Mercantile Exchange, platinum futures for October delivery climbed 0.4 percent to $1,405.60 an ounce. Palladium futures for September delivery increased 0.8 percent to $569.90 an ounce.

To contact the reporters on this story: Debarati Roy in New York at droy5@bloomberg.net; Maria Kolesnikova in London at mkolesnikova@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net


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