Gold Near $1320 as Silver Jumps on Fed

Gold surged the most in nine months and silver jumped to a 13-week high as the Federal Reserve said U.S. interest rates will remain low, driving the dollar down and boosting demand for the metals as alternative investments.

Prices are jumping after weeks of quiet trading that drove the metal’s 60-day historical volatility to the lowest since 2010. Even as the European Central Bank on June 5 unveiled unprecedented steps to boost economic growth, volatility kept sinking. Now, Fed Chair Janet Yellen’s outlook for rates to stay low for a considerable time and escalating violence in Iraq is reviving investor interest.

Bullion climbed 70 percent from December 2008 to June 2011 as the Fed bought debt and held borrowing costs near zero percent, boosting inflation concerns. The metal plunged 28 percent last year as consumer costs stayed muted and equities rallied. The dollar fell to a four-week low today against a basket of 10 major currencies.


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