Gold near 6-1/2-month high on Fed hopes
Singapore, September 10, 2012
Gold inched up on Monday towards a 6-1/2-month high hit in the previous session, buoyed by expectations for the Federal Reserve to take imminent easing action after the latest data painted a bleak picture of the US job market.
Friday's data showed US job growth slowed significantly in August, fanning hopes that the Fed will announce another round of quantitative easing, also known as QE3, at this week's policy meeting.
Easing monetary policy leads to expectations of rising inflation and drives investors to bullion, seen as a good hedge against rising prices.
"The possibility of QE3 has definitely grown, but the risk is also climbing as if we were about to draw the last card at a poker game," said a Shanghai-based trader.
"If QE3 is announced, gold is very likely to break above $1,800. But before that we may see some fluctuation in prices."
Spot gold edged up 0.1 per cent to $1,737.63 an ounce by 0311 GMT, after rising to $1,741.30 the session before, its highest since February 29.
US gold was little changed at $1,740.30, holding onto its 3-per cent gain from last week.
Technical analysis showed a bullish picture for spot gold, suggesting prices may rise towards $1,786 during the day, said Reuters market analyst Wang Tao.
After months of dull trading, the precious metals market sprang into life in August as central banks around the world, especially the Fed and European Central Bank, signalled that they would launch more stimulus to aid frail economies.
Spot gold has jumped 7 per cent over the past three weeks, while cash silver soared 20 per cent during the period.
"Gold has been in the overbought territory since last week, and we may see some profit-taking as the volatile investment demand has been the main factor behind the recent rally," said Lynette Tan, an analyst at Phillip Futures in Singapore.
Speculators raised net bullish bets on US gold futures and options rose to a six-month high 144,775 contracts in the week ended September 4, data from the US Commodity Futures Trading Commission.
Investors piled into gold-backed exchange-traded funds as well. Holdings of gold ETFs rose to a fresh record high of 72.125 million ounces on Friday.
In other news, Hong Kong's net gold exports to China in July rose 13 per cent on the month to nearly 46 tonnes, the second-highest level this year after April, signalling robust demand from the country that is poised to overtake India as the world's top gold consumer this year. – Reuters
More INTERNATIONAL NEWS Stories
- US sanctions will boomerang, warns Russia
- China plans $50bn bank to fund projects
- Sony to sell Tokyo 'birthplace'
- Obama orders sanctions over Russian moves
- Crimea parliament votes to join Russia
- Arab League to be revamped
- 'Upskirting' is legal: Massachusetts court
- Singapore probes 'unnatural' death of bitcoin trader
- Onus on world powers for Syria war crimes: UN
- US, Russia set for talks on Ukraine crisis
- Brent oil drops below $109
- Services outshine manufacturing, pushing up jobs
- Bitcoin bank shut down after hacker attack
- India to kick off world's biggest poll on April 7
- China signals focus on reforms
- Hundreds ready for bitcoin exchange class action
- Space taxi, Jupiter mission in Obama budget
- Putin: Use of force last resort in Ukraine
- Powers to boost Lebanese military, economy
- Egypt bans Hamas activities in Egypt
- Putin ends army exercise, markets rally
- Russia has violated international law: Obama
- Russian markets hit as Putin tightens grip on Crimea
- Iran nuclear deal 'being implemented as planned'
- Global factory growth stumbles as demand falters
- Obama warns of 'fallout' for Israel if peace effort fails
- Ukraine mobilises after Putin's 'declaration of war'
- Oil jumps $2 over Ukraine tension
- US threatens to isolate Russia for Ukraine aggression
- Ukraine mobilises for war, calls up reserves