Dec. 13 (Bloomberg) -- Gold futures rose in New York after signs of low U.S. inflation indicated Federal Reserve policy makers meeting next week have more room to maintain their $85 billion of monthly bond purchases.
Wholesale prices declined for a third straight month in November, reflecting lower costs for energy and cars, a Labor Department report showed today. Bullion surged 70 percent from the end of 2008 through June 2011 as the Fed bought debt and kept interest rates near zero percent to boost economic growth amid the most-severe global recession since World War II.
“If you believe the government that inflation is non- existent, that should be enough to take the Fed tapering talk off the table for good next week,” Peter Hug, the global trading director of Kitco Metals Inc. in Montreal, said in an e- mailed report.
Gold futures for February delivery climbed 0.8 percent to settle at $1,234.60 an ounce at 1:38 p.m. on the Comex in New York. Prices slumped 2.6 percent yesterday, the most since Oct. 1. The metal gained 0.5 percent this week.
Prices are also supported “thanks to some pickup in Chinese demand,” Abhishek Chinchalkar, a research analyst at Mumbai-based AnandRathi Commodities Ltd., said today in a report. “We expect movement in gold to be quite choppy heading into next week’s FOMC meeting.”
The Fed may begin reducing its bond purchases at its Dec. 17-18 meeting, according to 34 percent of economists in a Dec. 6 Bloomberg survey, up from 17 percent in a Nov. 8 poll. The U.S. House passed a federal budget plan yesterday, boosting speculation the measure will support the economy.
Gold has fallen 26 percent this year, heading for the first annual drop since 2000. Some investors lost faith in the metal as a store of value amid a U.S. equity rally to a record.
Silver futures for March delivery advanced 0.8 percent to $19.604 an ounce in New York.
On the New York Mercantile Exchange, palladium futures for March delivery dropped 0.6 percent to $716.20 an ounce, extending the weekly loss to 2.7 percent. Platinum futures for January delivery slid 0.1 percent to $1,362.90 an ounce.
--With assistance from Supunnabul Suwannakij in Bangkok, Ranjeetha Pakiam in Kuala Lumpur, Glenys Sim in Singapore and Nicholas Larkin in London. Editors: Thomas Galatola, Patrick McKiernan