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Gold Extends Best Week Since January on U.S. Stimulus Prospects

Nov. 9 (Bloomberg) -- Gold climbed to a three-week high in New York and headed for the biggest weekly gain since January on prospects of more U.S. stimulus. Holdings in bullion-backed exchange-traded products rose to a record.

Gold gained this week on speculation U.S. policy makers will add to stimulus after President Barack Obama’s re-election and on concern Greece may fail to meet bailout requirements. Assets held in exchange-traded products reached 2,596.1 metric tons yesterday, data compiled by Bloomberg show. Gold demand in India, 2011’s biggest user, may climb as much as 15 percent this quarter as festivals and a decline in prices boosts sales, jewelry maker and exporter Rajesh Exports Ltd. said.

“Record-high ETP holdings are a strong signal that institutional and private investors have faith in gold and see it as the strongest currency,” said Bayram Dincer, an analyst at LGT Capital Management in Pfaeffikon, Switzerland. “Gold trends higher in November because of festivities in India. It’s the typical seasonality trade.”

Gold for December delivery rose 0.4 percent to $1,732.60 an ounce by 7:18 a.m. on the Comex in New York after reaching $1,738, the highest since Oct. 19. Prices are up 3.4 percent this week, the most since Jan. 27. Bullion for immediate delivery added 0.1 percent to $1,732.76 in London.

Bullion, up 11 percent this year and on course for a 12th straight annual advance, has outperformed the Standard & Poor’s 500 Index, which gained 9.5 percent in 2012. Gold prices and ETPs gained as central banks from the U.S. to Europe and Asia took steps to bolster economies hurt by Europe’s debt crisis.

“With President Obama re-elected, the thinking now is that the Fed’s easy-money policies will likely go on,” Edward Meir, an analyst at INTL FCStone Inc. in New York, said in a report e- mailed today, forecasting gold may gain to $1,775 this month.

Silver for December delivery reached a one-week high of $32.495 an ounce and was last down 0.2 percent at $32.185. It’s set for a 4.3 percent gain this week, the most in two months. Platinum for January delivery rose 1 percent to $1,558.30 an ounce. Palladium for December delivery was 0.2 percent lower at $612.85 an ounce.

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