Gold Surges $70 Per Ounce as Fed Decision Sparks Inflation Concerns

Gold futures on the COMEX Division of the New York Mercantile Exchange rallied about 70 U.S. dollars per ounce on Thursday in the wake of U.S. Federal Reserve's plan to buy more than 1 trillion dollars of U.S. bonds and mortgage-backed securities, which sparked the anticipation for potential inflation. Silver and platinum also ended much higher.

Gold price for April delivery was up 69.70 U.S. dollars, or 7.8 percent, to settle at 958.80 dollars an ounce. It touched as high as 963.5 dollars earlier in the session, the highest level in four weeks.

May silver closed at 13.52 dollars per ounce, soaring 1.585 dollars. April platinum gained 79.40 dollars to 1,121.80 dollars per ounce.

The Federal Reserve announced on Wednesday afternoon that it would purchase 300 billion dollars of longer-term Treasuries and 750 billion dollars of mortgage-backed securities and agency debt.

Analysts indicated that this plan will create more liquidation which is supposed to accelerate the inflation. Gold's appeal of hedging risk was strengthened by the potential inflation anticipation.

The Fed decision also weighed on dollar. By the end of gold floor trading time, the dollar rate versus euro was at 1.3693 dollars, well down from the high of 1.2986 dollars during the Wednesday session, posting the biggest decline since euro appeared. This gave great support to gold's surge as investors opted to buy the precious metal as a safety alternative to hedge the risk of dollar's depreciation.