London: Gold climbed to an almost seven-week high on speculation that the Federal Reserve's pledge to keep interest rates low will drive the dollar lower and boost demand for precious metals as an alternative asset.
Gold rose 2.7 per cent yesterday after the Fed said its benchmark interest rate will stay low until at least late 2014. Low rates mean gold is more competitive against assets that pay dividends or interest.
The dollar dropped as much as 0.5 per cent against the euro yesterday. Holdings of gold in exchange-traded funds jumped 0.4 per cent on Wednesday and US Mint gold coin sales are heading for the best month in a year.
"The Fed's language was clearly dollar bearish," said David Jollie, an analyst at Mitsui & Co. Precious Metals Inc in London. "Most of the driving forces for buying gold are still there."
Gold for immediate delivery jumped 0.3 per cent to $1,715.22 an ounce at 11:05am in London after climbing to $1,718.57, the highest price since December 9.
