BLBG:Gold Advances on Outlook for Further Stimulus at Fed Meeting
Gold rose, after dropping for the first day in three yesterday, as the outlook for more stimulus from the U.S. Federal Reserve spurred demand for the metal as a store of value. Palladium headed for the best run since 2008.
Cash gold climbed as much as 0.4 percent to $1,732.60 an ounce before trading at $1,730.97 by 3:13 p.m. in Singapore. The metal gained to $1,741.70 on Sept. 7, the most expensive since Feb. 29, on speculation of additional stimulus. Assets in gold- backed exchange-traded products expanded to a record 2,480.428 metric tons yesterday, data compiled by Bloomberg show.
The policy-setting Federal Open Market Committee will weigh additional steps at its Sept. 12-13 meeting, with unemployment stalled above 8 percent for 43 months. Chairman Ben S. Bernanke signaled last month that a third round of quantitative easing, or QE, might be needed to lower joblessness. Gold almost doubled from December 2008 to June 2011 as the Fed bought $2.3 trillion of debt in two rounds of QE.
“The market will hover around current levels as investors await the Fed meeting,” said Xiang Nan, an analyst at CITICS Futures Co., a unit of China’s biggest listed brokerage. “While technical levels indicate gold may be overbought as most of the expectation for QE3 is priced into the market, there is still buying interest on the outlook for a weaker dollar.”
Gold fell 0.5 percent yesterday as the dollar climbed for the first time in four days against a six-currency basket. Bullion’s so-called 14-day relative-strength index held today above the level of 70 for an eighth day that indicates to technical analysts that a drop in prices may be imminent.
December-delivery gold was little changed at $1,734.30 an ounce on the Comex in New York.
Cash palladium rose for an eighth day in the best run since February 2008. Investors increased their holdings in exchange- traded products by 27,220 ounces last week, the most since May. The metal gained as much as 0.7 percent to $671.85 an ounce, after climbing to $673 yesterday, the highest price since May 2.
Spot silver gained 0.6 percent to $33.5713 an ounce. Platinum climbed for the seventh straight day, rising 0.6 percent to $1,602.38 an ounce.
To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net
To contact the editor responsible for this story: Jake Lloyd-Smith at jlloydsmith@bloomberg.net
