October 05, 2010, 9:56 AM EDT

By Pham-Duy Nguyen and Nicholas Larkin

Oct. 5 (Bloomberg) -- Gold climbed to a record in New York as the dollar extended its decline, boosting demand for precious metals as alternative assets. Silver advanced to a 30-year high.

Gold reached $1,333.80 an ounce as the dollar dropped as much as 0.7 percent against a basket of six currencies. Federal Reserve Chairman Ben S. Bernanke said yesterday the U.S. central bank may buy more debt to help the economy. The Bank of Japan today pledged to keep its benchmark interest rate at “virtually zero.” Since Sept. 14, gold has risen to a record 12 times.

“When governments are in the business of printing money, gold is going to do well,” said Matt Zeman, a metals trader at LaSalle Futures Group in Chicago. “More quantitative easing is inevitable at this point for the U.S. The dollar is going to suffer, and gold is going to take out records along the way.”

Gold futures for December delivery rose $16.10, or 1.2 percent, to $1,332.90 at 9:29 a.m. on the Comex in New York. Before today, gold had gained 20 percent this year.

In London, gold for immediate delivery is up 21 percent this year and headed for a 10th consecutive annual gain, the longest winning streak since at least 1920. Bullion has outperformed global equities, Treasuries and many industrial metals, prompting record investment in gold-backed exchange- traded products.

Japan Cuts

The Fed has left its benchmark interest-rate target at a record low and pledged to take more steps to spur growth if necessary. Japan’s central bank today cut the overnight call- rate target to a range of 0 percent to 0.1 percent, from 0.1 percent, and set up a 5 trillion yen ($60 billion) fund to buy government bonds and other assets.

“Monetary easing in Japan reinforces gold’s role as a store of value in a world of looser policy, as does the threat of competitive devaluation between major currencies,” Edel Tully, a London-based analyst at UBS AG, said in a report.

Gold may reach $1,500 by the end of the year and $2,500 “in a year or so,” Peter Hambro, the chairman of Petropavlovsk Plc, Russia’s third-largest producer of the metal, said today in an interview with Bloomberg Television’s “Countdown.” Prices may climb to $2,000 within the next 10 years, Rogers Holdings Chairman Jim Rogers said yesterday in a CNBC interview. Rogers said he owns gold and silver and is “pessimistic” on the future value of the dollar.

India Futures

Gold for immediate delivery in London touched a record $1,332.07, and bullion prices in Canadian dollars climbed to C$1,358.05, the highest level since at least 1971, according to data compiled by Bloomberg. In India, the world’s biggest gold buyer, futures for December reached a record 19,441 rupees per 10 grams on the Multi Commodity Exchange of India Ltd.

Silver futures for December delivery rose 31.4 cents, or 1.4 percent, to $22.35 an ounce on the Comex, after touching $22.375, the highest price since September 1980. Silver rose to an all-time high of $50.35 in New York in 1980, a year after the Hunt brothers tried to corner the market.

Platinum futures for January rose $18.60, or 1.1 percent, to $1,690.70 an ounce on the New York Mercantile Exchange. Palladium futures for December delivery rose $9.15, or 1.6 percent, to $570.45 an ounce.

Gold futures added 5.1 percent in the third quarter, compared with a 17 percent advance for silver and a 7.9 percent increase for platinum. Palladium futures advanced 29 percent.

--Editors: Steve Stroth, Millie Munshi.

To contact the reporters on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net; Nicholas Larkin in London at nlarkin1@bloomberg.net.

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

Source: http://www.businessweek.com/news/2010-10-05/gold-rises-to-record-on-investor-demand-for-currency-alternative.html