Gold – Seven-Month High
Gold steadied around seven-month highs on Monday, having posted a fourth successive weekly gain last week, after the Federal Reserve’s pledge to keep interest rates low undermined the U.S. dollar and fed investor appetite for bullion.
Spot gold was steady on the day at $1,768.70 an ounce by 5:42 a.m. EDT (0942 GMT), having risen by nearly 2 percent last week in its fourth successive weekly increase, the longest stretch of weekly gains in more than a year.
The Fed said last week it would keep U.S. rates near zero until middle of 2015, building on its existing vow to maintain them at this level until late 2014, triggering a 2-percent rise in the gold price in one day.
The central bank also committed to $40 billion in monthly purchases of mortgage-backed securities as long as job growth was sluggish to keep borrowing rates low for homebuyers and keep credit flowing through the financial system.
“The market has to consolidate the gains it has made since the end of August. That has been already a significant move upwards for the various precious metals, so if we do not see $1,800 (in gold) this week, that would not be a problem as, nevertheless, the signs are that precious metals prices are moving higher,” Peter Fertig, a consultant for Quantitative Commodity Research, said.
The Fed has already spent nearly $3 trillion on combinations of Treasury and MBS purchases in the last four years.
In this time, the gold price has doubled in value as private buyers and central banks alike have sought alternatives to the U.S. dollars in which to invest.
GOLD RISING
Gold has risen by 13.2 percent so far in 2012, putting it on course for an eleventh yearly price increase.
A Reuters poll showed the Fed will buy a total of $600 billion of bonds under its new stimulus program, known as quantitative easing or QE3, and will look for a U.S. unemployment rate of 7 percent before it halts the program.
The prospect of more support for the U.S. economy from the Fed in the form of bond buying, or quantitative easing, has driven a flurry of investor demand for gold.
In the last month, holdings of gold in exchange-traded funds (ETFs) backed by physical metal have hit a record 73.58 million ounces, having risen by more than 3.0 million ounces since mid-August.
“At around $1,770 per troy ounce, gold is trading close to the 6-1/2-month high it reached on Friday. It is not only ETF investors who have been contributing to the rising prices … but increasingly also speculative financial investors,” Commerzbank analysts wrote in a note.
Speculative holdings of U.S. gold futures rose last week to a one-year high representing 18.2 million ounces of gold.
Platinum fell by 0.2 percent on the day to $1,691.49 an ounce, having gained in 10 out of the prior 11 trading sessions.
Two mines in South Africa reopened their doors on Monday after suspending operations last week as a precaution against the labor unrest sweeping through the region’s platinum belt, although the situation on the ground remained tense.
Police launched a crackdown over the weekend to disarm miners and end five weeks of labor unrest, following a government promise to get tough on strikes that have choked off platinum output in the world’s top producer of the metal.
Aquarius Platinum’s Kroondal platinum mine and Xstrata’s chrome mine near Rustenburg restarted on Monday and world number one producer Anglo American Platinum said it would restart operations on Tuesday.
Operations were still suspended at Lonmin, the world’s third-largest platinum producer, after being shuttered a month ago by a violent strike that left 45 dead and dozens injured following clashes between striking miners and police.
Since the strike broke out at Lonmin, platinum has gained nearly a quarter in value to trade at its highest since late February.
Palladium was down nearly 2 percent on the day at $683.72 an ounce, while silver was down 0.3 percent at $34.49 an ounce.
Original Article : Reuters
(Editing by Alison Birrane)