Gold price jumps to near 3-week high - Tue Jul 16 21:43:06 2013
16 Jul 2013 09:43 GMT
 

LONDON: Gold jumped to a near three-week high as the dollar tumbled after the US Federal Reserve signaled it would continue to pursue monetary stimulus, given tame inflation and a fragile labor market.
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LONDON: Gold jumped to a near three-week high as the dollar tumbled after the US Federal Reserve signaled it would continue to pursue monetary stimulus, given tame inflation and a fragile labor market.
Fed Chairman Ben Bernanke said on Wednesday that a highly accommodative policy was needed for the foreseeable future, surprising investors after his comments on June 19 that the economy was expanding strongly enough for the Fed to end the stimulus measures by mid-2014.
The tapering would support a rise in interest rates and bolster the dollar, making gold less attractive.
“I think that a degree of caution by the Fed is now likely to replace the rather optimistic picture that was implied in May and June, as the economic recovery is not quite clear cut as previously thought,” Mitsubishi analyst Jonathan Butler said.
Spot gold climbed as much as 2.7 percent to $ 1,298.36, its highest since June 24. It was up 1.7 percent to $ 1,285.16 an ounce by 1407 GMT.
Comex gold jumped as much as 4 percent to a two- and-a-half week high of $ 1,297.20 an ounce. It was trading at $ 1,284.50, still up $ 37.20.
This strength marks bullion’s fourth day of gains in its longest winning streak since mid-April. Weekly gains of around 5 percent were also boosted by good physical demand from China.
Gold is still down 23 percent this year after taking a beating following Bernanke’s comments in May and June that the Fed could begin scaling down its bond purchases later this year.
But comments from the central banker at a conference on Wednesday suggested that stimulus could last longer, pressuring the dollar and making commodities priced in the greenback cheaper for holders of other currencies.
Copper jumped about 3 percent to near one-month highs, while US crude hit multi-month highs.
“Commodities will likely push higher going into next week, as the pendulum has clearly swung from a scenario where most participants were expecting the Fed to start paring back stimulus in September to one where there is growing uncertainty that this indeed will happen anytime soon,” INTL FCStone analyst Ed Meir said.
The dollar extended losses after US data showed the number of Americans filing new claims for unemployment benefits rose last week.
Traders said prices could target a break through technical resistance at $ 1,300.
“I suspect a test of $ 1,300 will be on the cards, considering order books are very light up to that point ... I am looking to fade a rally into $1,300-$1,310, with a stop in at $1,315 and a take profit at $ 1,285,” MKS Capital senior trader Alex Thorndike said.
However, investor sentiment remained guarded. Holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust GLD, fell 0.1 percent to 30.192 million ounces on Wednesday, hitting fresh lows since February 2009.
Gold’s strength also pushed silver to a three-week high of $20.26 an ounce earlier — at 1408 GMT the metal was up 3.83 percent at $ 20.07.
Platinum and palladium were close to earlier three-week highs of $ 1,409.50 an ounce and $ 728.50 an ounce, respectively.

Reproduced with permission from Arab News



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