PRECIOUS-Gold holds near 4-1/2 month high, focus on Fed

Wed Aug 29, 2012 2:46am EDT

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 (Updates prices, adds quotes)
    By Lewa Pardomuan
    SINGAPORE, Aug 29 (Reuters) - Gold firmed on Wednesday and
held near its highest level in more than four months on hopes
that U.S. Federal Reserve Chairman Ben Bernanke may announce
further stimulus measures for the economy at a speech later this
week.
    Bernanke is set to keep markets guessing about the timing of
another round of bond purchases when he speaks on Friday in
Jackson Hole, Wyoming, but he is likely to sustain expectations
for action of some kind next month. 
    The Fed, which has kept rates near zero since December 2008,
has promised to keep them there until at least late 2014 to
nurture a weak recovery, but previous rounds of asset purchases
have burnished gold's safe-haven appeal.
    Gold rose $1.16 to $1,667.69 an ounce by 0614 GMT,   
within sight of a 4-1/2 month high of $1,676.45 hit on Monday. A
report showing U.S. consumer confidence deteriorated in August
to the lowest in nine months boosted gold. 
    Silver, which often tracks gold, was hardly changed
at $30.85 per ounce and not far from Monday's three-month high.
    "We see near-term risks of a reversal if Jackson Hole does
not deliver what the market is hoping for and gold could
challenge $1,650 support and possibly $1,630," said Nick
Trevethan, senior metals strategist at ANZ in Singapore.
    "In the run up to the weekend we do not expect either market
to show any clear direction, with silver likely to trade between
$30.00 and $31.40, and gold to move between $1,650 and $1,676,"
he added.
     
    Gold rallied to around $1,790 in February, the highest level
so far in 2012, after the Fed at the time said it would keep
interest rates near zero until at least the end of 2014. Prices
have shed about 7 percent since then as there have been no signs
of further easing.
    U.S. gold futures for December delivery rose $1.20
to $1,670.90 an ounce.       
    The euro remained firm while Asian shares steadied as
investors awaited Bernanke's Friday speech for signs of whether
the bank would opt for more monetary stimulus and a European
Central Bank policy meeting next week. 
    In the physical market, dealers expected to see buying on
dips from India during the festival season. Retail gold demand
traditionally gains pace from August, when the festival and
wedding seasons start, culminating with Diwali, the Hindu
festival of light.
    "There's a bit of physical demand, but I think the market is
flooded with gold bars. I've lowered my premiums to 30 to 50
cents from 50 to 70 cents last week," said a dealer in
Singapore. 
    "There had been some selling from Indonesia. We haven't seen
much buying from India, but they are preparing for the high
season. If prices go down they will take the opportunity to
buy."
    Another dealer said higher gold prices also prompted selling
from holders in Southeast Asia. "People have been selling gold
and we are absorbing those gold bars. My premiums are also 30 to
50 cents," he said. 
    Holdings of the largest gold-backed exchange-traded-fund
(ETF), New York's SPDR Gold Trust GLD, rose 0.23 percent on
Tuesday from Monday, while that of the largest silver-backed
ETF, New York's iShares Silver Trust SLV, fell 0.12 percent for
the same period. 
        
  Precious metals prices 0614 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1667.69    1.16   +0.07      6.64
  Spot Silver        30.85    0.01   +0.03     11.41
  Spot Platinum    1519.49    8.29   +0.55      9.08
  Spot Palladium    633.60   -1.30   -0.20     -2.90
  COMEX GOLD DEC2  1670.90    1.20   +0.07      6.64         9397
  COMEX SILVER SEP2  30.83   -0.05   -0.15     10.44         3624
  Euro/Dollar       1.2561
  Dollar/Yen         78.52
 
  COMEX gold and silver contracts show the most active months
 
        
    
    
    

 (Editing by Miral Fahmy)
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