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Gold heads for biggest weekly gain in two years

Source : REUTERS
Last Updated: Fri, Jul 12, 2013 04:15 hrs
Gold

Gold rose for a fifth session on Friday, on track for its biggest weekly gain in nearly two years on easing fears of an early end to U.S. monetary stimulus that has boosted bullion's appeal as a hedge against inflation.

FUNDAMENTALS

Spot gold had climbed 0.1 percent to $1,286.21 an ounce by 0016 GMT. It touched close to $1,300 on Thursday, its highest in three weeks.

Bullion has gained 5 percent so far this week, on course for its largest weekly climb since October 2011.

Comex gold and silver were also trading near multi-week highs hit on Thursday.

Federal Reserve Chairman Ben Bernanke said on Wednesday that the overall message from the central bank was that a "highly accommodative policy is needed for the foreseeable future".

Financial markets, which had tumbled after Bernanke said last month that the Fed's $85 billion in monthly bond purchases could be scaled back this year, jumped on Thursday with the Dow and S&P 500 indices hitting all-time closing highs.

Gold, still down nearly 25 percent this year, could face further headwinds as some investors jump to rallying stocks, dumping holdings in gold-backed exchange traded funds.

Investors pulled $998.8 million from commodities and precious metals funds, up from withdrawals of $92.6 million the prior week, data from Thomson Reuters' Lipper service showed on Thursday.

Gold traders in India, the world's biggest buyer of the metal, refrained from fresh purchases as prices climbed to their highest level in more than two weeks.

MARKET NEWS

The U.S. dollar fell to multi-week lows against the euro and yen on Thursday as traders scaled back expectations the Fed would slow its asset purchases in the coming months.


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