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Monday, February 22, 2010

Gold Heads for Weekly Gain on Speculation Dollar Rally to Stall

Business Week

Gold, little changed in New York, headed for a second straight weekly gain on speculation that the dollar’s rally will stall, boosting the appeal of the precious metal as an alternative investment.

The dollar rose as much as 0.6 percent against the euro before paring gains. The Federal Reserve yesterday raised the discount rate it charges banks for direct loans for the first time in more than three years, a signal that the U.S. economy is recovering from the longest recession since World War II.

“Gold looks strong,” said Matt Zeman, a metals trader at LaSalle Futures Group in Chicago. “People are realizing this isn’t a tightening. Raising the discount rate isn’t going to have an effect on the American household. It all goes back to the credibility of fiat currencies. People will continue to buy gold on dips.”

Gold futures for April delivery slipped $1.30, or 0.1 percent, to $1,117.40 an ounce at 11:51 a.m. on the New York Mercantile Exchange’s Comex unit. A close at that price would leave the metal up 2.5 percent this week.