Gold prices rose today, heading for the biggest weekly advance in five

Gold prices rose today, heading for the biggest weekly advance in five, on speculation central banks may boost purchases after South Korea bought bullion to diversify assets.

The gold gained 0.4 per cent to 1,751.22 dollar an ounce. Prices are up 4 per cent this week, the most since the week ended October 28. Silver gained 1.8 per cent to 33.33 dollar an ounce.

The Bank of Korea, owner of the world’s eighth-biggest foreign-exchange reserves, purchased 15 metric tons of gold last month, said Lee Jung, head of its investment-strategy team. Gold has climbed 23 per cent this year as investors and central banks bought the metal as an alternative to stocks, bonds and currencies.

Central banks are expanding reserves for the first time in a generation as the precious metal is in the eleventh year of a bull market.

Purchases of 450 tons in 2011 may be repeated next year as Asian nations and emerging economies diversify their reserves. Central-bank purchases in the third quarter jumped more than sixfold to 148.4 tons, according to the World Gold Council.

Prices also increased as the euro climbed against the dollar. Gold and the US currency tend to move inversely. – Bloomberg