Gold climbed to a record in New York as investors sought an alternative to a weakening dollar. Silver traded near a 30-year high, and platinum rose to the highest level in more than four months.

Gold futures reached $1,320 an ounce, the highest price ever, as the dollar headed for a third straight weekly drop against the euro on speculation that the Federal Reserve will ease monetary policy further to stimulate the U.S. economy. Before today, gold rallied 19 percent this year.

“Gold is continuing to propel itself higher on the weakness of the dollar,” said Adam Klopfenstein, a senior market strategist at Lind-Waldock in Chicago. “The Fed now wants to see inflation,and they’re going to step in and prop up the bond market. If you’re a coupon clipper in the bond market, you’re going to want to go with assets with higher returns, like gold.”

Gold futures for December delivery rose $8.10, or 0.6 percent, to $1,319.40 at 10:08 a.m. on the Comex in New York. The metal rose 5.1 percent in the three months ended in September, the eighth straight quarterly gain.

Federal Reserve Bank of New York President William Dudley said the outlook for U.S. job growth and inflation is “unacceptable” and that more monetary easing is probably needed to spur the economy and avert deflation.

The central bank has kept the benchmark rate at between zero and 0.25 percent since December 2008 and purchased Treasuries and mortgage-backed securities to help boost the economy.

More Gains Predicted

Gold may rise 3 percent on further quantitative-easing steps in the U.S., Bank of America-Merrill Lynch commodity strategist Francisco Blanch wrote in a report yesterday. The first $1.7 trillion of easing translated into an 8 percent increase in gold prices 12 months later, he wrote. The second round is estimated at $500 billion to $750 billion by the first quarter of 2011, according to the bank.

Since Sept. 14, when gold breached the record set on June 21, the metal has climbed to all-time highs 11 times.

“Gold is not at a top yet, and $1,300, the old resistance level, is now a level of support,” said Klopfenstein of Lind- Waldock.

‘Follow the Money’

Gold for immediate delivery in London reached a record $1,318.40.

“Dips were ultimately viewed as an opportunity to buy” yesterday, Edel Tully, a London-based analyst at UBS AG, said today in a report. “In September, the tendency was very much to follow the money. As long as this persists, investors will fear missing out on the next rally.”

Silver futures for December delivery rose 24.4 cents, or 1.1 percent, to $22.065 an ounce on the Comex. Yesterday, the price reached $22.125, the highest level since October 1980.

Platinum futures for January delivery rose $26.80, or 1.6 percent, to $1,685.40 an ounce on the New York Mercantile Exchange. Earlier the price climbed as much as 1.9 percent to $1,689.40, the highest level since May 18.

Palladium futures for December delivery rose $2.25, or 0.4 percent, to $573.50 an ounce. Yesterday, the metal touched $582.65, the highest price since March 2008.

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

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

Source: http://www.bloomberg.com/news/2010-10-01/gold-may-advance-as-investors-seek-protection-from-dollar-drop-oil-gain.html