Gold on Thursday rose the most in six weeks after the dollar fell to a record against the euro. Traders increased bets the Fed will cut borrowing costs on Oct. 31 after a government report showed housing starts fell to a 14-year low.

“The Fed would rather have economic growth by cutting rates at the expense of the dollar, and a weak dollar is usually good for gold,” said Mario Innecco, a futures broker specializing in precious metals at MF Global Ltd. in London.

Gold for immediate delivery rose to US$771.10 an ounce earlier Friday, the highest since January 1980, and was up 2.7 percent on the week at US$769.04 an ounce as of 1:49 p.m. in London, the biggest advance since the week ending Sept. 21.

The Fed last lowered its benchmark lending rate half a point to 4.75 percent on Sept. 18 to protect the U.S. from sinking into a recession sparked by losses in securities tied to subprime mortgages.

Gold will average “just over US$700 an ounce” in the second half this year, London-based research company GFMS Ltd. said in a quarterly newsletter e-mailed Friday. Spot gold has averaged US$693 since July 1.

“A move away from risky assets and into safe haven instruments is beginning to gather momentum,” GFMS analyst Nikos Kavalis wrote in the report.

Silver increased 7 cents to US$13.865 an ounce.

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