Gold futures settled at the highest price in seven months Monday after a U.S. central banker made the case for bond buying through next year and money managers boosted their stakes in the precious metals on the first day of the new quarter. The most actively traded contract, for December delivery, rose $9.40, or 0.5%, to settle at $1,783.30 a troy ounce on the Comex division of the New York Mercantile Exchange, the highest ending price since Feb. 28. Futures rose as high as $1,794.40 a troy ounce early Monday, the highest intraday price since mid-November of 2011, in the minutes after a key supporter of the Fed’s new bond-buying program made the case for its continuation through next year. Speaking on CNBC, Charles Evans, president of the Chicago Federal Reserve Bank, said the Fed’s latest effort to jumpstart the economy is “going to be effective. In my opinion, we continue those purchases through 2013.” Such easy-money programs can raise the prospect of inflation down the line and draw investors looking for a hedge into precious metals. Much of gold’s 5% gain in September came in anticipation of, and reaction to, the Fed’s program, outlined in a statement Sept. 13. Gold’s gains on Monday also came as investment fund managers moved into the precious metal on the first day of the month and quarter, analysts and traders said. Managed-money funds tracked by the Commodity Futures Trading Commission increased their futures and options bets on rising Comex gold prices by 78% between mid-August and last Tuesday. Last week their net long position–or the difference between bets prices will rise and bets they will fall–was the most in CFTC data since the week ended Feb. 28. “It’s simply a reallocation and a rotation of money into the market,” Roy Friedman, a vice president with precious metals dealer Dillon Gage Metals, said of Monday’s gains. “Frequently you see those types of moves when gold and silver are in vogue and have rallied sharply in any given quarter. Lots of managed money will lock in a profit at the end of the quarter, and then get back in the market.” During the three months ended in September, benchmark gold futures rose 10%. Silver, which can also gain when investors are looking for a hedge against weakening currencies, surged 31%. Silver for December delivery, the most actively traded contract, also settled at a seven-month high on Monday. Futures rose 1.1% to settle at $34.952 a troy ounce. U.S. Mint sales of gold and silver coins rose in September, according to data posted on the agency’s website. The Mint sold 68,500 troy ounces of gold American Eagle coins, up 75% from August. Sales of silver coins stood at 3,255,000 ounces, up 13% from August. Gold and silver sales during the month were down 25% and 27%, respectively, from September 2011.
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