Gold rises as dollar's decline boosts demand

08:36, March 18, 2010      

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Gold futures on the COMEX Division of the New York Mercantile Exchange closed higher on Wednesday as the dollar slipped versus the yen and the pound. Sliver and platinum both rose.

The most active gold contract for April delivery rose 1.7 U.S. dollars, or 0.2 percent, to finish at 1,124.2 dollars.

The U.K. government report said Wednesday that the number of people in U.K. receiving unemployment benefits in February fell at the fastest pace since 1997.

The bank of Japan said on Wednesday to hold its interest rate and doubled the amount of cheap short-term loans available to banks.

The U.S. Department of Labor said on Wednesday that the Producer Price Index, a measure of wholesale inflation, declined by a bigger-than-estimated 0.6 percent in February, which reinforced the pledge of the Federal Reserve on Tuesday to keep interest rates low for an "extended period", signaled that inflation is not an immediate threat to the U.S. economy.

Stocks were boosted by Federal Reserve's decision on Tuesday and continued gains on Wednesday, which encourage investors to move out of the safety of U.S. dollar. The weak performance of dollar increased gold's appeal of hedge as investors purchase the precious metal as assets against a weak dollar.

May silver rose 16.9 cents to 17.523 dollars per ounce. April platinum rose 4.9 dollars to 1635.6 dollars an ounce.

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