RTRS:PRECIOUS-Gold ends 4-day winning streak, sterling gold at record
By Chikako Mogi
TOKYO, June 23 (Reuters) - Gold fell on Thursday, snapping a four-day
winning streak, as the dollar gained after the Federal Reserve gave no hint of
further stimulus, but gold priced in sterling hit a record high as the British
currency sagged on the possibility of more easing.
Traders said gold would be range-bound for the time being until new
developments unfold on the prospects for U.S. monetary policy and sovereign debt
problems in the euro zone, the two main themes that have so far dictated market
direction.
"The market will likely remain in narrow ranges around current levels with
the topside capped until fresh factors emerge to prompt funds to aggressively
want to buy gold," said Yuichi Ikemizu, branch manager for Standard Bank in
Tokyo.
Spot gold had eased 0.1 percent from late New York levels to
$1,546.56 an ounce by 0555 GMT, after peaking at $1,557.75 on Wednesday, its
loftiest since hitting a record high above $1,575 on May 2.
"Investors and end-users are not interested in buying gold unless the price
falls below $1,530, while there is little incentive to boost prices above
$1,550," Ikemizu said.
The main focus for the market remains interest rates and credit woes, and
there were no surprises in the Federal Reserve saying it would keep to its
current easy monetary stance, while Greece has averted an imminent crisis and
the market is now waiting to see whether European leaders can come up with a
convincing plan to help Athens avoid a debt default.
Market players will scrutinise upcoming U.S. economic data including the key
jobs data and manufacturing numbers to gauge the prospects for possible further
easing by the Fed, as well as the debate over the U.S. deficit and debt problem,
said Koichiro Kamei of financial research firm Market Strategy Institute.
U.S. lawmakers are in talks to reach a deficit-cutting deal that would give
Congress the political cover to raise the $14.3 trillion debt limit well before
Aug. 2, when the Treasury Department has warned it will run out of money to pay
the government's bills.
"U.S. data and the debt problem, depending on the outcome of the talks,
could lead to speculation about further quantitative easing by the Fed, the sort
of speculation that could push gold prices higher out of the current range,"
Kamei said.
The Fed on Wednesday cut its forecasts for U.S. economic growth but offered
no hint of further monetary support, saying the recovery should gradually pick
up heading into 2012.
Fed Chairman Ben Bernanke said the vow to keep interest rates exceptionally
low is intended to suggest the Fed is at least two or three meetings away from a
move, but that the time period could be "significantly longer" depending on the
economy.
The outcome of the Fed's two-day policy meeting on Wednesday helped the
dollar index , which tracks the U.S. currency's performance against a
basket of major currencies, bounce off a one-week low to stand at 75.100.
In contrast, minutes of the Bank of England's June meeting released on
Wednesday signalled British interest rates were unlikely to rise from their
record low 0.5 percent this year and the BoE could even opt for more
quantitative easing.
That helped to push sterling-priced gold to a fresh lifetime high
of 969.66 pounds per ounce earlier on Thursday as the British currency sagged to
three-month lows in Asia.
Reflecting a lack of incentives, holdings of the largest silver-backed
exchange-traded-fund (ETF), New York's iShares Silver Trust , edged up 0.25
percent from Tuesday to Wednesday, while the largest gold-backed ETF, New York's
SPDR Gold Trust , remained unchanged for the same period.
Spot silver eased 0.3 percent to $36.22 an ounce.
Oil fell more than $1 on Thursday, reversing the previous session's gains,
as a rise in the dollar overshadowed a surprise draw in gasoline stockpiles in
the United States, the world's top consumer.
The Nikkei stock average closed down 0.3 percent on Thursday.
