Gold inches up after Fed officials' comments on stimulus

Source : REUTERS
Last Updated: Wed, Jul 03, 2013 03:05 hrs
Gold

Gold edged higher on Wednesday after a near 1 percent fall in the previous session, as two Federal Reserve officials said the U.S. central bank was likely to continue supporting the economy through asset purchases for some time.

FUNDAMENTALS

Spot gold rose 0.2 percent to $1,244.06 an ounce by 0014 GMT, while U.S. gold was little changed at $1,243.5. Spot gold fell 0.9 percent on Tuesday as the dollar strengthened.

Bullion, typically seen as a hedge against inflation, has taken a beating since Fed Chairman Ben Bernanke said last month the economy was recovering strongly enough for the central bank to begin tapering its stimulus in the next few months, and possibly end the programme in mid-2014.

Gold posted its biggest ever quarterly loss of 23 percent for the April-June period, but began the third quarter on a positive note.

Investors are awaiting U.S. data this week to determine the strength of the economy and the exact timing of the Fed tapering.

The Fed's easy monetary policy will likely be warranted for "quite some time" as the U.S. central bank drives down high unemployment while nudging low inflation back toward target, Fed Board Governor Jerome Powell said on Tuesday.

The head of the Federal Reserve Bank of New York on Tuesday reiterated that the U.S. central bank will likely continue to support the economic recovery for some time to come despite market worries that it was soon pulling back.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.37 percent to 964.69 tonnes on Tuesday.

Gold traders in India, the world's biggest buyer of the metal, stayed on the sidelines on Tuesday, and premiums continued to get support from lower supplies due to restrictions by the central bank.

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MARKET NEWS

The U.S. dollar hit its highest in a month against the yen and euro on Tuesday while a gauge of global equities fell as U.S stocks reversed course to end slightly lower.


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