Gold Little Changed Ahead of Fed Rate Decision; Silver Falls

By Pham-Duy Nguyen

Dec. 16 (Bloomberg) -- Gold, little changed in New York, may rise as the Federal Reserve keeps interest rates low, weakening the dollar and boosting the appeal of the precious metal as an alternative investment. Silver fell.

The dollar fell to a two-month low against the euro on expectations Fed policy makers will cut the benchmark lending rate 50 basis points to a 1958-low of 0.5 percent. Gold rallied to a record in March as rate cuts sent the dollar to an all- time low against the euro.

“If the Fed has to keep rates very low for a long time, that’s going to be awful for the dollar and very good for gold,” said Matt Zeman, metals trader at LaSalle Futures Group in Chicago.

Gold futures for February delivery rose 20 cents to $836.70 an ounce at 9:18 a.m. on the Comex division of the New York Mercantile Exchange. The metal yesterday reached $843.70, the highest price since mid-October.

Silver futures for March delivery fell 3 cents, or 0.3 percent, to $10.59 an ounce.

To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.