Gold climbs toward one-month high on Japan stimulus expectation

Gold climbed toward a one-month high in London, extending a second consecutive weekly advance, on speculation Japan will increase stimulus. Silver was set for the longest rally in a year.

Bank of Japan officials started a two-day policy meeting today. The nation’s currency had dropped to the lowest since June 2010 versus the dollar on speculation the BOJ, under pressure from the government of new Prime Minister Shinzo Abe, will boost stimulus to lift the economy out of recession. Gold remained higher after India raised its import duty on bullion.

“The BOJ introducing fresh stimulus would be positive for precious metals,” analysts at Mumbai, India-based AnandRathi Commodities Ltd. said today in a report. “The economic calendar from the U.S. is relatively light this week. Movement in bullion may stay confined to a narrow band.”

Gold for immediate delivery rose 0.2% to $1,688.36 an ounce by 3:20 p.m. in London. Prices reached a four-week high of $1,696.28 on Jan. 17 and gained 1.3% last week. Gold for February delivery was little changed at $1,687.80 on the Comex in New York.

Bullion futures volume was 58% below the average for the past 100 days at this time of day, according to data on Bloomberg. Precious-metals trading will probably be subdued today as U.S. financial markets are shut for a public holiday, UBS AG wrote in a report. Gold at the afternoon “fixing,” used by some mining companies to sell output, was little changed at $1,687.50 in London compared with this morning’s figure.

India, 2011’s biggest gold buyer, raised import duties on the metal and platinum to 6% immediately from 4%, economic affairs secretary Arvind Mayaram said today in New Dehli. Mayaram said gold demand will moderate, while Angel Commodities Broking Pvt. said consumption will probably fall in two to three months.

Goldman Forecast

Goldman Sachs Group Inc. expects gold to climb toward $1,825 over the next three months as U.S. lawmakers tackle the debt ceiling amid slowing growth, while restating a forecast for weaker prices in the second half as the world’s largest economy rebounds, the bank’s analysts wrote in a Jan. 18 report.

Since 1960, Congress has raised or revised the debt limit 79 times, including 49 times under Republican presidents, according to the Treasury Department.

Silver for immediate delivery added 0.3% to $31.9625 an ounce, after reaching $32.1225 on Jan. 18, the highest since Dec. 18. The metal is up for a sixth day, the longest rally since January 2012. The U.S. Mint said last week that it sold out of 2013 American Eagle silver coins and will resume sales on or about the week of Jan. 28, when inventory is replenished. Holdings in silver-backed exchange-traded products are at a record, data compiled by Bloomberg show.

Palladium fell 0.6% to $718 an ounce, after reaching a 16-month high of $732.50 on Jan. 18. Platinum was up 0.5% at $1,677.20 an ounce.

Bloomberg News

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