Gold Futures Rise to One-Week High on U.S. Stimulus Speculation

NEW YORK (Sept 27)  Gold futures rose to a one-week high after Federal Reserve Bank of Chicago President Charles Evans said more signs of strength in the economy are needed to reduce asset purchases.

“I can’t have tremendous confidence in our economic situation,” Evans said today in Oslo. “A lot of developments are still under way. At the moment, the data doesn’t provide us with confidence to make major adjustments” to monetary stimulus, he said. Prices also rose as the U.S. budget deadlock may shut down the government.

“Evans’ remarks are moving the market,” Peter Hug, the global trading director of Kitco Metals Inc., in Montreal, said in a report. “The focus of the market remains on the debt- ceiling impasse.”

Gold futures for December delivery added 1.1 percent to $1,338.20 an ounce at 10:13 a.m. on the Comex in New York. Earlier, the price reached $1,345.20, the highest for a most- active contract since Sept. 20.

The U.S. Senate plans to vote today on an expenditures bill, three days before federal-spending authority runs out and a few weeks until the country hits its borrowing limit. The nation faced an impasse over raising the debt ceiling in 2011 before Congress approved a plan to head off a default that was signed by the president that August. Gold reached a record $1,923.70 on Sept. 6, 2011.

Bullion is set for the first annual drop in 13 years. Some investors lost faith in the metal as a store of value on optimism that economies are strengthening. The central bank unexpectedly left its bond-purchase program unchanged last week, and 24 of 41 economists surveyed by Bloomberg on Sept. 18-19 said the Fed will take the first step in slowing debt purchases in December