By Nicholas Larkin Aug. 13 (Bloomberg) -- Gold gained the most in at least a week in New York and London as the dollar weakened, increasing the metal’s appeal as an alternative investment. Silver climbed to a two-month high. The dollar slid as much as 0.9 percent against the euro after the German economy, Europe’s largest, unexpectedly expanded in the second quarter and the Federal Reserve yesterday pledged to keep interest rates low for an “extended period” and said the U.S. recession is easing. Bullion tends to climb when the greenback weakens. “The dollar is under fire today,” brokerage firm GoldCore Ltd. in Dublin said in a note. “Gold is taking up the slack.” Gold futures for December delivery climbed as much as $10.60, or 1.1 percent, to $963.10 an ounce on the New York Mercantile Exchange’s Comex division. The commodity traded at $960 by 8:39 a.m. local time. Bullion for immediate delivery in London advanced 1.1 percent to $957.90 an ounce. The metal rose to $956 in the morning “fixing” in London, used by some mining companies to sell production, from $947.25 at yesterday’s afternoon fixing. Spot prices slid for five days through Aug. 11, the longest decline in five months. Bullion is heading for a fifth weekly increase in a row in London. The Fed’s Open Market Committee extended by a month the scheduled end to its $300 billion purchase of U.S. Treasuries, or so-called quantitative easing, aiming for a “smooth transaction in markets.” It left the target rate for overnight lending between zero and 0.25 percent. Inflation Effect Gold “should remain supported by the inflationary impact of the Fed’s rate decision, in addition to the boost to general risk sentiment,” James Moore, an analyst at TheBullionDesk.com in London, said in a report. The Dollar Index, which gauges the currency’s performance against six monies, dropped as much as 0.6 percent today, the third straight retreat. Expectations for a weaker greenback over the next six months increased, according to 2,345 respondents from New York to London and Tokyo in the Bloomberg Professional Global Confidence Index. Crude-oil futures, used by some investors as an inflation gauge, climbed as much as 2.9 percent to $72.21 a barrel today in New York. Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by the metal, were unchanged at 1,065.49 metric tons yesterday, data on the company’s Web site show. The fund reached a record 1,134.03 tons on June 1. ING Forecast Gold will average $925 an ounce in 2010, ING Groep NV said in a report dated yesterday, 16 percent above its previous forecast of $800, because of “potentially inflationary implications of quantitative easing” and limited mine-output growth. The bank raised this year’s estimate to $925 from $900. Silver for September delivery gained as much as 3.8 percent to $15.145 an ounce in New York, the highest since June 12, and last traded at $14.90. The metal will average $13.50 an ounce next year, ING said, 17 percent above its prior forecast of $11.50. Platinum for October delivery rose 2.1 percent to $1,270.90 an ounce, and palladium for September delivery was 2.3 percent higher at $279.70 an ounce. To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net

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