Gold gained as the dollar dropped to the lowest level in a month after Lawrence Summers withdrew from consideration as the next Federal Reserve chairman before the central bank meets this week to decide on stimulus. Silver rallied from its worst week since June.
Bullion for immediate delivery climbed as much as 0.8 percent to $1,336.40 an ounce and traded at $1,329.38 by 8:19 a.m. in Singapore. Prices dropped 4.7 percent last week, the biggest decline since the period ended June 28. Gold for December delivery rose 1.6 percent to $1,329.70 an ounce on the Comex in New York, rallying from a 5.6 percent loss last week.
President Barack Obama had mentioned Summers and Fed Vice Chairman Janet Yellen as potential candidates to lead the central bank after Ben S. Bernanke’s term as chairman expires Jan. 31. The Fed is forecast to reduce its bond-purchase program, called quantitative easing, this week, according to a Bloomberg News survey. Summers, a former Treasury Secretary, would tighten Fed policy more than Yellen, a Bloomberg Global Poll showed last week.
The Bloomberg Dollar Index, a gauge against 10 major trading partners, fell as much as 0.5 percent to the lowest since Aug. 12. The index gained 3.4 percent this year while gold tumbled 21 percent as investors lost faith in the metal as a store of value and the Fed indicated it may buy fewer bonds.
The metal rose 70 percent from December 2008 to June 2011 as the U.S. central bank pumped more than $2 trillion into the financial system by buying debt. Policy makers will cut monthly purchases by $10 billion at their Sept. 17-18 meeting to $75 billion, a survey of 34 economists Sept. 6 showed.
Silver for immediate delivery was little changed at $22.22 an ounce. Prices slumped 6.9 percent last week, the most since June 21. The metal for December delivery surged as much as 3.6 percent to $22.49 an ounce in New York before trading at $22.23.
Palladium advanced 1 percent to $707.55 an ounce while platinum was little changed at $1,452.90 an ounce.
To contact the reporter on this story: Phoebe Sedgman in Melbourne atpsedgman2@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
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