ET:Gold buoyed ahead of minutes from Fed's meeting
LONDON: Gold edged higher on Tuesday, following its worst weekly performance in two months last week, supported by improving physical demand and some investor uncertainty ahead of minutes from the US Federal Reserve's recent policy meeting.
The Fed did not offer any indication at its annual meeting at Jackson Hole over the weekend that it would offer any additional policy measures, such as more quantitative easing to prop up the sputtering economy.
Data on Monday showed US consumer spending rose at its fastest pace in five months in July, soothing some concern about a possible slip back into recession, which boosted stocks, the dollar and some commodities, including base metals.
The largest margin increase in over two years on COMEX gold futures last week resulted in a third weekly decline in speculative interest in the metal, yet analysts said the high level of uncertainty pervading the financial markets right now would support the price.
Spot gold was last quoted 0.3 per cent up on the day at $1,793.00 an ounce by 0925 GMT, having fallen by more than 1 per cent last week, when investors stripped more than $200 off the price after it hit a record $1,911.76 on Aug 23.
"Given the ascendancy we've had, (price falls) shouldn't be a surprise and I suppose any dips, or sell-offs of that sort are manna from heaven for people who haven't yet bought into the story," said Credit Agricole analyst Robin Bhar.
"You'd have to say 'buy the dips' because with all the uncertainty all still very present and far from being resolved, despite better data, you still want gold as an insurance."
In the euro zone, data showed the economic climate was worse than expected in August, highlighting the prospect of a further slowdown in growth in the second half of the year.
Meanwhile, the International Monetary Fund cut its growth forecasts for the United States to 1.6 per cent from a forecast of 2.5 per cent made just two months ago, and added both the Fed and the European Central Bank must be ready to ease policy.
The Fed releases the minutes from its August policy meeting later in the day. The central bank is split internally over what steps to take to bolster growth and markets reacted positively to Chairman Ben Bernanke's decision at Jackson Hole to let the next policy meeting run for two days, rather than one,
