Dec. 16 (Bloomberg) -- Gold futures rose for the second straight session as the dollar’s decline boosted demand for the precious metal as an alternative asset.
The greenback fell as much as 0.2 percent against a basket of 10 currencies. Traders unwound wagers on lower gold after signs of slowing U.S. manufacturing opened the door for the Federal Reserve to delay scaling back monetary stimulus, a day before a meeting by policy makers starts, said Bart Melek, the head of commodity strategy at TD Securities in Toronto.
“We’re seeing some short-covering on uncertainty ahead of the Fed meeting” and “on the risk that the taper will happen a little later,” Melek said in a telephone interview.
Gold futures for February delivery climbed 0.8 percent to settle at $1,244.40 an ounce at 1:36 p.m. on the Comex in New York. The metal, up 0.8 percent on Dec. 13, has tumbled 26 percent this year, partly as investors shifted to equities.
The Markit Economics preliminary index of manufacturing declined to 54.4 in December from a final reading of 54.7 last month, data showed today. A reading above 50 indicates expansion.
The dollar dropped as traders bet that the Fed will keep interest rates at close to zero percent in 2014. Gold has “a firmer bias on the back of a ‘weakish’ dollar,” Peter Hug, the global trading director of Kitco Metals Inc. in Montreal, said in a report.
The number of economists in a Bloomberg poll on Dec. 6 who forecast that Fed policy makers may start curbing $85 billion of monthly bond purchases this week doubled to 34 percent from last month’s poll.
Hedge funds’ net-long position in Comex gold jumped 25 percent in the week ended Dec. 10, while short bets slid 6.7 percent, government data showed on Dec. 13.
Silver futures for March delivery advanced 2.5 percent to $20.101 an ounce on the Comex. On the New York Mercantile Exchange, palladium futures for March delivery gained less than 0.1 percent to $716.35 an ounce. Platinum futures for January delivery fell 0.2 percent to $1,360.10 an ounce.
--Editors: Patrick McKiernan, Thomas Galatola