Gold Sets New High After Fed

NEW YORK (TheStreet) -- Gold surged to an all-time high of $1,098 as the Federal Reserve reiterated its intent to continue its cheap-money policies for "an extended period" and investors continued to follow India's lead and purchase the precious metal as an alternative asset.

Gold delivery for December was rising $12.30 to $1,097.20 an ounce at the Comex division of the New York Mercantile Exchange. The contract has traded as low as $1,080.50 and as high as $1,098.50.

Silver was adding 34 cents to $17.52 and copper was rising 4 cents to $3.

$1,100 Gold

On Tuesday, the Federal Reserve Bank of India announced it bought 200 tons of the IMF's 403 tons of gold at the spot price of $1,045. A weak U.S. dollar and short covering also buoyed gold prices. The U.S. dollar index was slipping to $75.66 as the U.S. Fed left interest rates between zero and 0.25% keeping money cheap with no end in sight stoking inflation fears and rallying the gold buyers. Historically, gold is bought as a safe haven asset during times of inflation.

"We've certainly seen some short covering ... and we've seen some ... producer buybacks and short covering today," says James Moore, analyst at TheBullionDesk.com. "But it's still really the knock on effect on India buying yesterday that's keeping gold up at the moment and speculation that maybe this is a sign of further central bank purchases and possibly a sea change in official holdings towards gold."

With gold touching the critical $1,100 resistance level, futures wait for the U.S. nonfarm payroll report on Friday.