Gold eases on stimulus fears after jump over $1,400
Singapore, August 26, 2013
Gold erased early gains on Monday that pushed it past the psychological $1,400 mark to an 11-week high, slipping on uncertainty over whether the US Federal Reserve will wind back its stimulus measures from next month.
The precious metal jumped in early Asian trading to $1,406.01 - its highest since June 7 - on the back of a rally on Friday and mounting political tensions in Syria.
However, it failed to hold on to the gains in a quiet trading session on Monday, ignoring supply concerns in South Africa and inflows into gold funds. London markets are closed for a bank holiday.
"We are generally coming out of the summer doldrums and people are looking for gold trade ideas," said one Hong Kong-based precious metals trader.
"We are in the aftermath of a highly distressed slowdown so people still see some value in it. At least as a trade if not a longer term investment."
Spot gold was down 0.2 per cent at $1,393.29 an ounce by 0259 GMT. It gained 1.6 per cent on Friday after weak US home sales.
The Fed could announce a cautious first step in tapering bond purchases at its meeting next month, provided there were no "really worrisome" signs the economy was faltering, a top US central banker said on Saturday.
In South Africa, the National Union of Mineworkers (NUM) gave gold mining companies seven days on Saturday to meet its
demand for pay rises of up to 60 per cent or face strike action.
NUM, the main mining union, walked out of deadlocked wage talks with the companies last week, setting the scene for a gold industry shutdown in a country that accounts for 6 per cent of total gold output.
Hedge funds and money managers boosted bullish bets in gold futures and options to their highest level since early February, buoyed by the uncertain timing of the Fed's planned unwinding of its bond-buying stimulus, a report by the Commodity Futures Trading Commission showed on Friday.
SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 0.72 per cent, or 6.61 tonnes, to 920.13 tonnes on Friday.
The fund has seen positive flows over the last two weeks, as gold prices gained on shifting sentiment and technical buying. - Reuters