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Gold advances to record as Fed maintains stimulus

Business Materials 28 April 2011 16:39 (UTC +04:00)

Azerbaijan, Baku, April 28 / Trend /

Gold advanced to a record after the Federal Reserve pledged to keep interest rates near zero to bolster the recovery, weakening the dollar and boosting demand for precious metals as a store of value, Bloomberg reported.

Immediate-delivery gold gained as much as 0.4 percent to $1,533 an ounce, and traded at $1,530.13 at 1:46 p.m. in Singapore. Bullion for June delivery in New York rose as much as 1.1 percent to $1,534, an all-time high.

Fed Chairman Ben S. Bernanke signaled yesterday that the U.S. central bank will maintain monetary stimulus. The central bank kept its target rate for overnight lending between banks at zero to 0.25 percent, while ending $600 billion of bond purchases on schedule in June.

"What's behind gold's rally is investors' fear over the dollar's decline," said Hwang Il Doo, a Seoul-based senior trader at KEB Futures Co. "As long as the U.S. keeps interest rates low, it's perceived by the market to buy more gold."

The dollar fell beyond $1.48 per euro for the first time since December 2009 after the Fed's pledge. The Dollar Index, which tracks its value against six counterparts, declined for an eighth day to the lowest level since July 2008.

Gold has gained 7.7 percent this year, extending a decade- long advance, the best run since at least 1920, as the prospect of currency debasement and accelerating inflation fuel investor demand. Fighting in Libya and sovereign-debt turmoil in Europe have also contributed to the rally this year.

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