Gold trades near record U.S. economy concerns may need more stimulus

Gold rose near a record in New York on concern the U.S. economy may need more stimulation, increasing the demand for wealth protection. Silver rose to a maximum of 30 years.

The dollar rose against the euro, European officials expressed disagreement about the necessary steps to stop the crisis of sovereign debt. Federal Reserve chairman, Ben S. Bernanke said the central bank may increase purchases of Treasury to bolster the economy. Gold futures, which generally move inversely to the dollar traded up 1 percent from a record $ 1424.30 an ounce established on 9 November.

Bernanke's comments "are largely bullish for precious metals," wrote Walter de Wet, an analyst at Standard Bank Plc in London, in a report. "More liquidity means a new impulse to the precious metals, gold in particular, and the weak dollar."

Gold futures for February delivery was up $ 13.80, or 1 percent, at $ 1,420 an ounce and was quoted at $ 1,415.50 at 8 am on the Comex in New York. The metal for immediate delivery in London was little changed at $ 1,414.45.

Spot prices reached a record of 902.6464 pounds sterling. The dollar rose 1.2 percent against the euro.

"Without a stronger dollar, gold is likely to trade higher," said Peter Fertig, owner of Quantitative Hainburg Commodity Research Ltd., Germany, today by phone.

Currency Devaluation

Bernanke said that unemployment may take five years to fall to a normal level and the Fed buys Treasury bonds beyond the $ 600 billion announced last month is possible, according to a transcript of an interview with CBS Corp s . '"60 Minutes" program. Gold is set for an annual gain of 10 º after the government spent billions of dollars and kept interest rates low to boost economies. European finance ministers are meeting today in Brussels.

"Given that most degrading of fiat currency is back on the agenda, it seems likely that the precious metals, especially gold and silver, are ready for further gains," said James Moore, analyst at TheBullionDesk.com, in London, in a report.

Gold is likely to advance to $ 1,500 next year on demand from investors and central banks, Bank of America Merrill Lynch said in a report dated 3 December. Prices are up 29 percent this year.

Silver for March delivery in New York added much as 2.4 percent to $ 29,975 an ounce, the highest since March 1980 and closed at $ 29,795. The metal is 77 percent this year and futures reached a record high of $ 50.35 in 1980, a year after the Hunt brothers tried to corner the market.

Ratio Falls

An ounce of gold bought as little as 47,326 ounces of silver in London today, at least since February 2007. Silver will average $ 29.50 next year as investors buy more metal and industrial growth is driving demand, the Bank of America Merrill Lynch, said.

"There is a certain impact on the replacement of silver as investors also see the metal as a store of value, like gold," said Ben Westmore, an analyst at National Australia Bank Ltd., today by phone from Melbourne.

Palladium for March delivery fell 0.9 percent to $ 763.15 an ounce, after reaching $ 780 on 3 December, the highest since April 2001. Platinum for January delivery was 0.3 percent, to $ 1723.20 an ounce. Average of $ 2,000 Platinum and Palladium will average $ 775 next year, according to Bank of America Merrill Lynch.