Gold capped the biggest advance since mid-October as the dollar weakened, boosting the appeal of the precious metal as an alternative investment. Silver reached the highest in almost three weeks.
The Bloomberg U.S. Dollar Index headed for a fourth straight loss, the longest slump in two months. Traders unwound bets on lower gold prices amid speculation that the Federal Reserve will signal short-term U.S. interest rates will remain low, said Bart Melek, the head of commodity strategy at TD Securities in Toronto.
“The dollar has weakened, so that is helping gold,” Melek said in a telephone interview. “We had seen some aggressive short positions being taken. Some of that is being taken off as many people feel that gold isn’t dropping into the precipice. It’s no longer a one-way bet.”
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