NEW YORK/LONDON, March 26: Gold rose about 1.5 per cent in heavy trading on Monday, on track for its biggest one-day gain in a month as renewed hopes for further US monetary easing fuelled bullion buying as a hedge against long-term inflation and economic uncertainty.

Bullion followed gains in equities and commodities after Federal Reserve Chairman Ben Bernanke said the US economy needs to grow more quickly to bring down the unemployment rate.

“It's not the headline inflation that's going to bump up, (but it's) still a long-term expectation. Gold has been behaving as the world seems to be monetizing debt,” said Jeffrey Sherman, commodities portfolio manager of DoubleLine Capital, a Los Angeles-based investment manager with $30 billion in assets.

Spot gold was up 1.5 per cent at $1,686.91 by 1626 GMT, having earlier hit a two-week high of $1,687.9.

US gold futures for April delivery were up $23.8 an ounce at $1,686.2, with trading volume already 20 per cent higher than its 30-day average, preliminary Reuters data showed.

Silver also rose 1.9 per cent to $32.8 an ounce.

Gold extended Friday's 1 per cent rise, and is on track for its biggest two-day gain since late January when the Federal Reserve said for the first time it expects to keep interest rates near zero until at least late 2014.—Reuters