Gold climbs toward one month high; BOJ expands asset purchases

by on January 22, 2013 5:42 am BST

Gold extended its advance toward a one-month high after the Bank of Japan set a 2 percent inflation target and shifted to Federal Reserve-style open-ended asset purchases in an attempt to end two decades of deflation.

Spot gold increased as much as 0.3 percent to $1,694.25 an ounce and traded at $1,693.90 at 12:56 p.m. in Singapore. Bullion reached a one-month high of $1,696.29 on Jan. 17 on concern global growth may slow. Gold for February delivery gained 0.4 percent to $1,693.10 on the Comex in New York.

Gold rallied for a 12th year in 2012 on global stimulus measures. Japan’s central bank will buy about 13 trillion yen ($145 billion) in assets per month from January 2014, it said today. In the U.S., House Republicans will use a vote tomorrow on a three-month debt-ceiling increase to try to force Senate Democrats to adopt a budget to spell out their spending plan.

“Loose monetary policy benefits gold and the Bank of Japan’s move may just be the impetus gold needs to take it past $1,700,” said Tao Jinfeng, an analyst at Guotai Junan Futures Co., a unit of China’s biggest brokerage by revenue.

Cash gold climbed 0.3 percent yesterday even after India, the biggest bullion importer in 2011, raised import duties on the metal to 6 percent immediately from 4 percent. Physical purchases will probably slow significantly after being very strong early this year, said Nick Trevethan, senior commodities strategist at Australia & New Zealand Banking Group Ltd.

Cash silver was little changed at $32.03 an ounce, after advancing for the past six days. If the metal gains today, it would be the longest rally since August 2011.

Spot platinum rose 0.6 percent to $1,686.25 an ounce, while palladium gained 0.2 percent to $719.75 an ounce.