NEW YORK (TheStreet) -- Gold prices were gaining on Monday, in line with a rise in all precious metals, as investors were purchasing gold as a safety hedge against the possibility the Federal Reserve will scale back its economic stimulus program.
Gold for February delivery at the COMEX division of the New York Mercantile Exchange was tacking on $6.40 to $1,235.40. The gold price traded as high as $1,237.20 and as low as $1,224.60 an ounce, while the spot price was up $7.01.
"The gold price is getting just a small boost, but I think it's outside metals that are driving it up," Phil Streible, a senior commodities broker at RJO Futures, said in a phone interview from Chicago. Streible said people are becoming skeptical of the new highs on the S&P 500 because they fear the Fed's decision to begin so-called tapering this month will trigger selling.
Platinum, which is heavily used in catalytic converters in automobiles, was rising $16.60 to $1,372.90 an ounce for the January 2014 contract. Palladium was rising $4 to $740.15 an ounce.
Gold prices have benefited in recent years from the central bank's monetary stimulus programs, which many investors view as inflationary policy. Many traders use gold as a hedge against inflation.
The rising likelihood in 2013 that the Fed will curb stimulus has contributed to gold's largest year-long decrease in more than a decade. Stocks could also take a hit on the announcement that central bankers will scale back monetary stimulus.
In this event, investors rotating out of stocks could allocate some of their positions in gold.
-- Written by Joe Deaux in New York.
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