Gold Advances to New Record as Fed keeps Low Interest Rate

CHICAGO, Aug. 10 (Xinhua) -- Gold futures on the COMEX Division of the New York Mercantile Exchange extended rally on Tuesday, sending gold price to a fresh new high, after the U.S. Federal Reserve said it will keep interest rates low "at least through mid- 2013", which lowers the opportunity cost for gold investors.

The most active gold contract for December delivery added 29.8 U.S. dollars, or 1.7 percent, to 1,743 dollars per ounce, the highest closing in history.

The Federal Reserve on Tuesday expressed concerns over the economic outlook and pledged to maintain the interest rates at ultra-low level "at least" through mid-2013, which is expected to lower the cost of holding gold, instead of saving in the banks.

Moreover, talks of the third round of quantitative easing program (QE3) in the wake of Standard & Poor's cut in U.S. credit rating added to the gold's bullish sentiment. The Dollar Index Tuesday traded around 74, down one percent from the prior trading day.

Market analysts noted that the macro concerns over the stagnant economic recovery and fears of further sovereign downgrades will keep the investors on edge, offering continuous support for gold.

JP Morgan joined a string of banks and brokers by upgrading its gold forecasts in recent days, raising its price estimates for this year by 39 percent and forecasting the precious metal will reach at least 2,500 dollars by the end of the year. HSBC analyst said that the gold rally is unlikely to end until sovereign risks recede in and outside of the U.S..

However, silver for September delivery slumped 1.497 dollars, or 3.8 percent, to 37.883 dollars per ounce. Platinum for October delivery hiked 32.8 dollars, or 1.9 percent, to 1,756.4 dollars per ounce.