Bank of Japan’s sudden asset-buying program has boosted the economic confidence of the stock markets across the world as gold and precious metals reached a six-month peak on Wednesday.
Gold for December delivery increased $4.10, or 0.2%, to $1,775.30 an ounce, levels not seen since late February. The metal reached an intra-day high of $1.781.80 an ounce early in the European trading day. On Tuesday, gold closed up by 60 cents, or less than 0.1%, to end at $1.771.20 an ounce.
Investors have recently pushed gold higher assuming that it works as an inflation hedge against that stimulus and potential devaluation of currencies.
The Bank of Japan said Wednesday it would increase the size of asset purchases by 10 trillion yen ($126.7 billion) to about ¥80 trillion ($12.6 trillion), in response to a slowdown in its domestic economy.
Three main factors affecting gold are continuing dollar devaluation, most recently due to Federal Reserve quantitative easing; global political tensions that drive investors to opt for safe investments, and rising production costs for gold.
Other metals such as silver also traded at levels not seen since early March. The December contract was tepid at $34.72 an ounce. It reached an intra-day high of $35.02 an ounce earlier in the European session.
Copper for December delivery was trading at highest levels since May, up 5 cents, or 1.2%, to $3.85 a pound.
Platinum was steady after a sell-off the prior day triggered by news that the multi-week strike at Lonmin was ending after the company signed a wage agreement with workers. October platinum rose 70 cents to $1,637 an ounce, after giving up $36.30 at the close Tuesday. Palladium for December delivery rose $6.15, or 1%, to $673.75 an ounce.