By Pham-Duy Nguyen Nov. 14 (Bloomberg) -- Gold rose the most in eight weeks on speculation that central banks will add more liquidity to unfreeze credit markets, spurring inflation and boosting the appeal of the precious metal. Silver and platinum also gained. Federal Reserve Chairman Ben S. Bernanke said the U.S. and other countries are ready to take more action to boost lending. The dollar declined against a basket of six major currencies after dropping 0.6 percent yesterday. More liquidity will devalue currencies and stoke inflation, said Frank McGhee, the head dealer of Integrated Brokerage Services LLC in Chicago. ``Basically, the government needs and wants an inflationary spurt to turn this economy around,'' McGhee said. ``Gold is probably $100 to $150 too cheap, based on the amount of liquidity that's already been pumped into the system.'' Gold futures for December delivery rose $37.50, or 5.3 percent, to $742.50 an ounce on the Comex division of the New York Mercantile Exchange, the biggest gain for a most-active contract since Sept. 18. The metal is up 1.1 percent this week. Silver futures for December delivery jumped 69 cents, or 7.8 percent, to $9.49 an ounce. The metal is down 4.7 percent this week. Platinum futures for January delivery rose $32.10, or 3.9 percent, to $845.10 an ounce on the Nymex. Palladium for December delivery gained $2.70, or 1.3 percent, to $216.65 an ounce. The Fed has cut its benchmark interest rate to 1 percent from 5.25 percent in September 2007 and provided more than $1 trillion in loans to financial institutions to help ease the worst credit crisis in seven decades. The collapse of Lehman Brothers Holdings Inc. on Sept. 15 helped trigger passage of a $700 billion bailout plan by the U.S. Since then, gold traded as high as $936.30 on Oct. 10 and as low as $681 on Oct. 24. `Awash With Dollars' Gold may rise as the dollar begins to slide, said Walter Otstott, a senior broker at Dallas Commodity Co. in Dallas. ``Bargain hunters and investors are starting to appreciate gold for its diversification attributes,'' Otstott said. ``Fundamentally, the world is awash with dollars, and we should see the greenback resume its long-term downward trend.'' The metal reached a record $1,033.90 in March as the decline in borrowing costs sent the dollar to an all-time low against the euro in July. Still, the dollar may fare better than other currencies in a global recession, analysts said. ``At current levels, the gold price is still trading relatively rich to the dollar,'' analysts at Deutsche Bank AG said in a report today. ``The fair value for gold stands around $600.'' To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.

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