Gold heads for biggest monthly gain in 22 months

Gold was little changed in New York, heading for biggest monthly gain in 22 months, as investors weighed a rally in global equities with the prospect of the Federal Reserve taking more action to spur the economy. The Dow Jones Industrial Average rose as much as 1.3 per cent to the highest in almost four weeks, erasing its 2011 loss. Gold is still headed for the biggest monthly gain since November 2009 after touching an all-time high of $1,917.90 an ounce on August 23. Minutes released Tuesday from the Fed's meeting last month showed some policymakers favoured more aggressive action to stimulate growth. "This is a shallow correction in gold," Adam Klopfenstein, a strategist at MF Global in Chicago, said in a telephone interview. "Equities are reasserting themselves, but in the backdrop, traders know the Fed is going to do something to stimulate the economy, so sell-offs in gold are being bought." Gold futures for December delivery rose 70 cents to $1,830.50 an ounce on the Comex. A close at that price would leave the most-active contract up 12 per cent last month and 29 per cent this year. The Standard & Poor's 500 Index is still headed for the fourth-straight monthly decline. Gold prices surged in August on mounting speculation that the US economic recovery will falter and as the Federal Reserve pledged to keep borrowing costs at a record low until mid-2013. In August, the metal also reached records in euros and British pounds amid Europe's sovereign-debt crisis.