RTRS:PRECIOUS-Gold rises on stronger equities, but still close to 7-wk low
* Gold bounces but still near recent trough
* Coming Up: Weekly jobless claims; 1230 GMT
(Updates prices)
By Lewa Pardomuan
SINGAPORE, Oct 25 (Reuters) - Gold climbed on stronger
equities on Thursday, but was still within sight of its weakest
level in seven weeks as the U.S. Federal Reserve helped boost
the U.S. dollar's safe-haven appeal by announcing its commitment
to economic stimulus measures.
Gold had rallied to an 11-month peak of $1,795.69 an ounce
in early October following the Fed's latest programme of
purchasing mortgage-backed debt, but has since drifted lower as
the U.S. dollar strengthened and, more recently, after signs
emerged of a slight improvement in the U.S. economy.
Gold had risen $8.27 to $1,710.20 an ounce by 0556
GMT. It fell to a 7-week low of around $1,698 on Wednesday soon
after the Fed said it was sticking to its plan to keep
stimulating growth until the job market improves.
"I think $1,700 is still quite a key support level.
Generally gold has been falling due to the dollar strength.
Recently, we also saw some stronger economic data coming from
the U.S.," said Lynette Tan, senior investment analyst at
Phillip Futures in Singapore.
"I expect that around the $1,700 level, we could also see
some bargain hunting," said Tan, adding that a firmer rupee
could help boost demand from top consumer India during the
festive season.
In a statement after a two-day meeting, the Fed repeated its
vow to keep rates near zero until mid-2015 and its pledge to
keep supporting growth while the recovery strengthens.
Despite the absence of surprises, the outcome should give
investors confidence to use the dollar as a funding currency for
carry trades. The dollar index eased from a peak of
80.151 to 79.850, but was still above last week's trough of
78.935.
U.S. gold for December delivery added $9.70 an ounce
to $1,711.30. Spot silver, platinum and palladium
bounced from lows.
In other markets, shares in Asia inched up Thursday as signs
of recovery in China and the United States eased fears of
deteriorating global growth, though generally weak corporate
earnings continued to make investors wary.
A lack of activity in the physical sector suggested that
some consumers expected gold prices to fall again. Gold has come
under pressure this week from worries about the global economic
slowdown after a trail of disappointing U.S. corporate earnings.
"We were surprised to see profit-taking from Indonesia
yesterday. It's all quiet and the demand is not there. I spoke
to a couple of clients and they told me the price should weaken
again," said a physical dealer in Singapore.
"But India should come back to the market because Diwali is
coming. We should be expecting a big volume of sales or a last
minute rush before the celebration," said the dealer.
The festive season in India will peak next month with
Diwali. Weddings also take place during this period, with gold
jewellery an essential part of the dowry Indian parents give to
their daughters.
