Gold rallies on hopes for more easing

Gold rose today on hopes that more easing may be on its way. Gold prices also got a boost from a weaker dollar and rising US stocks. Gold isn't the only metal to benefit, silver also rose on a weaker dollar and hopes for another round of QE.

By Claudia Assis and Virginia Harrison
April 12, 2012, 2:32 p.m. EDT
Market Watch

SAN FRANCISCO (MarketWatch) — Gold futures rose on Thursday, getting a boost from a weaker dollar and rising U.S. stocks and as talks surfaced of another round of economic stimulus in the U.S. and elsewhere.

Gold for June delivery GCM2 +1.10% rallied $20.30, or 1.2%, to settle at $1,680.60 an ounce on the Comex division of the New York Mercantile Exchange

Other precious and base metals also benefitted, with silver leading gains.

Support was underpinned by a weaker dollar and rising U.S. stocks, analysts said.

Several also pointed out to comments by two Fed officials, William Dudley and Janet Yellen, taken by the market as leaving the door open for more monetary stimulus.

Gold traders are “positioning themselves” on the belief that more liquidity will be injected into the system, with talks of another round of large-scale bond purchasing popping up in the U.S. and China, among other countries, said Adam Klopfenstein, a market strategist with Archer Financial in Chicago.

U.S. stocks rose on the signals interest rates will remain ultralow for the time being, which took some of the sting off a disappointing report on unemployment benefits.

New York Fed President William Dudley on Thursday told an audience in upstate New York the economy is not yet strong enough to make a significant dent in the jobless rate.

Yellen made similarly cautious comments on Wednesday, saying she expects the U.S. will fall “far short in achieving our maximum employment objective.”

Earlier Thursday, the U.S. Labor Department said the number of Americans applying for jobless benefits rose to its highest level in two and a half months, jumping 13,000 to a seasonally adjusted 380,000 in the week ended April 7. Read more about the jobless benefits data.

Chinese authorities are slated to release data on gross domestic product on Friday. China has become the center of attention for investors, who fear the commodity-gobbling country’s economy might be slowing down.

Meanwhile, the ICE dollar index DXY -0.53% , which measures the U.S. dollar against a basket of six currencies, traded at 79.314, down from 79.791 in North American trade late Wednesday.

A decline in the U.S. unit boosts dollar-denominated commodities such as gold, because it makes them cheaper to holders of other currencies.

Gold closed Wednesday’s seesawing session down 40 cents, struggling with the absence of major catalysts. Read more on Wednesday's gold session.

Gold prices are outrunning most investments week-to-date, up 1.8% so far against losses for most metals, according to FactSet data.

In other metals trading Thursday, silver for May delivery SIK2 +2.90% rose $1, or 3.2%, to $32.52 an ounce.

May copper HGK2 +2.07% added 8 cents, or 2.2%, to $3.72 a pound.

July platinum PLN2 +1.38% gained $21.70, or 1.4%, to $1,606 an ounce, while palladium for June delivery PAM2 +2.51% rose $16.50, or 2.6%, to $653.10 an ounce.

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