QMX Gold Corp. (fka QMXGF)

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Gold 1394.40 - Advances in New York
Trading as Weaker Dollar Boosts Investor Demand
By Nicholas Larkin and Chanyaporn Chanjaroen - Dec 14, 2010 5:46 AM PT

Dec. 13 (Bloomberg) -- John Stephenson, a fund manager at First Asset Investment Management Inc., talks about the outlook for commodities including copper, gold, corn and crude oil. He talks with Pimm Fox on Bloomberg Television's "Taking Stock." (Source: Bloomberg)

Gold gained for a second day in New York as a weaker dollar boosted demand for the precious metal as an alternative investment.

The dollar fell to a three-week low against the euro on speculation the Federal Reserve may signal today it’s open to increasing debt purchases beyond the $600 billion already announced. Gold, which usually moves inversely to the greenback, reached a record $1,432.50 an ounce on Dec. 7.

“The U.S. dollar weakness is driving gold,” Peter Fertig, owner of Quantitative Commodity Research Ltd. in Hainburg, Germany, said today by phone. “There’s still an argument for further implementation of quantitative easing in the U.S. That would benefit gold.”

Gold for delivery in February rose 50 cents to $1,398.50 an ounce by 8:43 a.m. on the Comex in New York.

Gold will average $1,550 next year, up from a previous forecast of $1,400, UBS AG analyst Julien Garran said in a report yesterday. Platinum and palladium are also among the bank’s top picks for next year, Garran said.

Gold gained 28 percent this year, set for a 10th annual gain, as investors lost confidence in currencies and bought precious metals as a protection of wealth. Further government bond purchases by the Fed are “certainly possible,” Chairman Ben S. Bernanke said in an interview broadcast on CBS Corp.’s “60 Minutes” on Dec. 5.

‘Safety Drive’

“We expect European debt concerns, continuing implications of quantitative easing and an ongoing safety drive to fuel investor demand,” UBS’s Garran said. “Absolute faith in fiat currencies remains shaky. Gold is currently behaving as a currency rather than a commodity.”

Gold assets in exchange-traded products rose 2.98 metric tons to 2,096.39 tons yesterday, according to data compiled by Bloomberg from 10 providers. Holdings reached a record 2,104.65 tons on Oct. 14. Silver holdings gained 51.02 tons to 15,090.16 tons, the highest amount since at least February, data from four providers show.

Platinum for January delivery gained $7.70, or 0.5 percent, to $1,705 an ounce and palladium for March delivery added $5.55, or 0.7 percent, to $758 an ounce. Silver for March delivery fell 10.9 cents, or 0.4 percent, to $29.515 an ounce.

http://www.bloomberg.com/news/2010-12-14/gold-advances-on-sustained-investor-demand-for-metal-as-wealth-protector.html