Dec. 27 (Bloomberg) -- Gold futures posted the longest rally in four months and silver climbed to a one-week high as the dollar’s slump boosted demand for precious metals as alternative investments.
The euro jumped to the highest in more than two years against the greenback after Jens Weidmann, a European Central Bank Governing Council member, said keeping interest rates low may endanger political reforms. The Standard & Poor’s GSCI Spot Index of 24 raw materials climbed to a 10-week high, paced by industrial metals.
“It’s a currency story,” George Gero, a vice president and precious-metal strategist in New York for RBC Capital Markets, said in a telephone interview. “The strong euro has kept sellers in gold on the sidelines.”
Gold futures for February delivery rose 0.1 percent to settle at $1,214 an ounce at 1:39 p.m. on the Comex in New York. The price climbed for the third straight day, the longest rally since Aug. 16. Earlier, the metal reached $1,218.90, the highest for a most-active contract since Dec. 19.
This year, gold has dropped 28 percent, heading for the biggest drop since 1981 and the first slump since 2000. Some investors lost faith in the metal amid a U.S. equity rally to a record.
Holdings in exchange-traded funds backed gold have dropped to the lowest since November 2009, according to data compiled by Bloomberg.
Silver futures for March delivery climbed 0.7 percent to $20.049 an ounce on the Comex. Earlier, the price reached $20.105, the highest since Dec. 18.
On the New York Mercantile Exchange, platinum futures for April delivery gained 1.1 percent to $1,378.90 an ounce. The price climbed for the third straight day, the longest rally since Oct. 22. Trading was 87 percent higher than the average in the past 100 days, data compiled by Bloomberg showed.
Palladium futures for March delivery advanced 1.6 percent to $711.95 an ounce, the largest gain since Dec. 4.
This year, silver dropped 34 percent and platinum declined 11 percent, while palladium climbed 1.2 percent.
--Editors: Patrick McKiernan, Thomas Galatola