Gold rises to 2-week high on dollar and silver soars

By Lewa Pardomuan

SINGAPORE (BestGrowthStock) – Gold jumped to a two-week high on Monday as investors expected more declines in the dollar ahead of a U.S. Federal Reserve’s policy meeting to shore up the economy, while silver and palladium hit multi-year peaks.

Chart-based buying also picked up after bullion surpassed a key resistance of $1,350 an ounce on Friday, lifting silver to its highest since early 1980 and palladium to a 9-year high. Gold hit a record of around $1,387 in mid-October.

The Fed is likely to announce new bond purchases to push borrowing costs lower and energize a sluggish recovery when its two-day meeting ends on Wednesday. Economists polled by Reuters expect the Fed to buy between $80 billion and $100 billion a month.

Gold added $6.95 to $1,364.00 an ounce by 2:15 a.m. ET, having hit an intraday high of $1,365.49. U.S. gold futures rose $6.6 an ounce to $1,364.2 an ounce.

For a 24-hour technical outlook on gold, see: http://graphics.thomsonreuters.com/WT/20100111093924.jpg

“Today, I am looking at some gains in gold in follow-through strength. Particularly, if gold hits higher, I think other precious metals like silver and palladium are likely to be boosted as well,” said Ong Yi Ling, investment analyst at Phillip Futures.

“On palladium, there are also strong fundamentals,” said Ong, referring to a recent proposal to have U.S. heavy trucks adhere to certain carbon emission standards.

The Obama administration has proposed that heavy trucks reduce carbon emissions by 20 percent by 2018 as part of a first-ever fuel efficiency standard for commercial vehicles.

Palladium and its sister metal platinum are used in autocatalysts to clean exhaust fumes.

Asian shares rallied on Monday, while the dollar struggled to hold ground on speculation the Fed could further ease policy when it meets this week by buying more U.S. government bonds.

The dollar is broadly under pressure after U.S. Treasury yields dropped on Friday, with the two-year yields falling near a record low ahead of the Fed meeting this week. A weaker dollar boosts gold’s appeal as an alternative investment.

South Africa’s Harmony Gold Co Ltd (HARJ.J: ) said it remains bullish on the gold price and continues to see it in the region of $1,500 an ounce next year.

“Sentiment is cautiously bullish before the Fed meeting but I think people are still talking about the price target of $1,400,” said a bullion dealer in Hong Kong.

“Silver is performing better than gold, but I don’t see much physical buying. We did see some purchases in gold but there’s also a bit of profit taking after it breached $1,360.”

The world’s largest silver-backed exchange-traded fund, iShares Silver Trust, said its holdings fell to 10,141.92 metric tons by Oct 29 from 10,181.46 metric tons on Oct 28. For details of the ETF’s silver holdings, click on:

http://link.reuters.com/wux96h

Oil rose to nearly $82 on Monday, buoyed by expectations the U.S. Federal Reserve will commit to a new round of monetary stimulus this week and prompt further weakness in the dollar.

(Editing by Himani Sarkar)

Gold rises to 2-week high on dollar and silver soars