Gold climbs with silver on outlook for stimulus amid debt talks

by on January 21, 2013 5:40 am BST

Gold advanced toward a one-month high on expectations for more stimulus while U.S. lawmakers wrangle over the debt limit. Silver traded near the highest level since Dec. 18 and was set for the longest rally in a year.

Spot gold rose as much as 0.4 percent to $1,691.50 an ounce, and was at $1,690.10 at 11:33 a.m. in Singapore. The metal last week climbed for a second week, the first back-to- back increase since September, and reached a one-month high of $1,696.28 on Jan. 17.

Gold rallied for a 12th year in 2012 on global stimulus measures. The Bank of Japan starts a two-day policy meeting today, while European finance ministers meet in Brussels for the first time this year. In the U.S., House Republicans will use a planned Jan. 23 vote on a three-month debt-ceiling increase to try to force Senate Democrats to adopt a budget to spell out their spending plan.

“This week brings into focus the BOJ meeting, the euro- zone finance ministers’ meeting, and U.S. debt-ceiling negotiations, all of which could potentially be bullish for gold,” said Feng Liang, an analyst at GF Futures Co., a unit of China’s third-biggest listed brokerage.

Gold for February delivery gained 0.2 percent to $1,690.10 an ounce on the Comex. Since 1960, Congress has raised or revised the debt limit 79 times, including 49 times under Republican presidents, according to the Treasury Department.

Goldman Sachs Group Inc. expects gold to climb toward $1,825 over the next three months as U.S. lawmakers attempt to tackle the debt ceiling amid slowing growth, while restating a forecast for weaker prices in the second half of 2013 as the world’s largest economy rebounds, the bank’s analysts wrote in a Jan. 18 report.

Silver Rallies

Cash silver gained as much as 0.8 percent to $32.11 an ounce, after touching a one-month high of $32.1225 on Jan. 18, and traded at $31.98. The metal is up for a sixth day, the longest rally since January 2012.

The U.S. Mint sold out of 2013 American Eagle silver coins and will resume sales about the week of Jan. 28 when inventory is replenished, the mint said Jan. 17. Holdings in the iShares Silver Trust, the biggest exchange-traded fund backed by the metal, on Jan. 16 jumped 572 metric tons, or 5.9 percent, the most since 2007, according to data on the fund’s website.

Spot platinum advanced 0.6 percent to $1,679.75 an ounce, while palladium slipped 0.2 percent to $720.75 an ounce.