Gold extends gains to fresh two-month highs
Singapore, August 16, 2013
Gold reversed early losses on Friday, hitting fresh two-month highs on strong buying from China and short covering after breaking through key technical levels, pushing the metal to its biggest weekly gain in a month.
Gold dipped early in Asian hours after strong US data indicated the Federal Reserve could soon start tapering its massive stimulus, but the positive momentum from the last few days sidelined bears.
The metal has gained for the last seven sessions out of eight, spurring rare inflows into the top gold exchange traded fund, although the longer-term trend has been negative.
"These levels are largely technically driven. They are unsustainable," said Mark Keenan, cross-commodity research strategist at Societe Generale in Singapore. "This does not change our underlying bearish forecast and we see this as a selling opportunity."
"We will get fresh QE tapering indications in the next Fed meeting in September. The tapering is likely going to start taking effect then and gold will fall again," Keenan said, referring to quantitative easing, or monetary stimulus.
Spot gold hit a two-month high of $1,372.51 on Friday before paring some gains to trade up 0.02 percent at $1,365.84 an ounce by 0303 GMT. It has risen about 4 percent this week.
Gold was supported by technical buying once prices crossed $1,350 on Thursday, as well as some safe-haven buying on escalating tensions in Egypt.
Silver gained after jumping 5 percent to a near three-month high. Platinum and palladium added to gains and were trading close to two-month highs.
Despite the recent gains, the metal is down nearly 20 percent this year on fears the US central bank would begin tapering its $85 billion monthly bond purchases.
The Fed's next policy meeting is on Sept. 17-18. The number of Americans filing new claims for jobless benefits fell to a near six-year low last week and consumer prices rose broadly in July, which could draw the Federal Reserve closer to trimming its massive bond-buying program. - Reuters