RTRS:PRECIOUS-Gold comes off from 4-week low, but US stimulus fears remain
* Gold up slightly but traders see further drop
* Fed official doesn't rule out December tapering
* Lack of physical demand could weaken prices
(Updates prices)
By A. Ananthalakshmi
SINGAPORE, Nov 13 (Reuters) - Gold rose on Wednesday after
hitting a four-week trough in the previous session, although
prices seemed poised to test further lows as fresh uncertainty
over the fate of U.S. stimulus measures dented bullion's appeal
as a hedge against inflation.
The Federal Reserve should keep monetary policy ultra-easy
given the economy's tepid growth and an uncertain outlook for
jobs growth, two senior officials said on Tuesday. However, one
of them said he would not rule out tapering in December.
Gold has already lost nearly a quarter of its value this
year amid speculation the U.S. central bank will start rolling
back its $85-billion monthly bond purchases soon.
Improving economic data - such as the strong U.S. nonfarm
payroll report last week - has reinforced fears the Fed could
soon begin tapering the purchases.
Spot gold gained 0.4 percent to $1,272.50 an ounce by
0710 GMT, snapping a four-day losing streak. It fell as much as
1.7 percent on Tuesday to $1,260.89, its lowest since Oct. 15.
"The sharp drop over the last few days is mostly a reaction
to the jobs data last week. Before the report, markets were
expecting a tapering only next year but after the data everyone
started thinking it could be in December," one Hong Kong-based
precious metals trader said.
"If the tapering is going to be in December, prices are
going to be much lower than current levels."
Silver was up 0.3 percent after dropping 3 percent in
the previous session to a four-week low.
Charts point to a further drop in gold prices, while weak
physical demand also indicates that prices could fall more.
"The U.S. dollar is stronger and stock markets are quite
steady. If physical demand doesn't pick up, then gold prices
will go lower," said Yuichi Ikemizu, branch manager for Standard
Bank in Tokyo.
Dealers said physical demand had failed to pick up due to
weaker regional currencies in Asia.
Spot gold is expected to fall further into a support zone of
$1,249-$1,251.66 per ounce, and a break below $1,249 will open
the way towards $1,223, according to Reuters technical analyst
Wang Tao.
PRICES AT 0710 GMT
Metal Last Change Pct chg YTD pct chg
