Source from (The Malaysian Insider): http://www.themalaysianinsider.com/business/article/gold-up-on-weaker-dollar-stimulus-hopes-before-fed-testimony/
Published: May 23, 2013
Shanghai gold prices fell slightly today but were still around
US$30 higher than spot gold, indicating that Chinese demand
was strong because it would be cheaper for local buyers to
purchase gold from overseas. — Reuters pic
Yesterday, New York Federal Reserve Bank President William Dudley and St. Louis Fed chief James Bullard said that further economic progress was needed before they would support curtailing bond purchases.
Spot gold reversed yesterday’s 1.3 per cent losses and rose to a session high of US$1,389.70 (RM4,169) an ounce. It was trading at US$1,384.91 by 0943 GMT, still up 0.7 per cent.
US gold futures for June delivery were up 0.5 per cent at US$1,383.80 an ounce.
The metal fell for eight sessions out of the past nine and touched US$1,338.95 on Monday, its weakest since April 16, when it recorded the worst daily loss for 30 years.
The dollar fell against the euro and a basket of main currencies ahead of Fed Chairman Ben Bernanke’s testimony to Congress at 1400 GMT on the state of the US economy, which should give clues on his monetary easing stance.
The Federal Open Market Committee also releases the minutes of its April 30-May 1 meeting later in the day.
“The correlation of the dollar with gold has been quite strong lately and today’s weakness in the US currency after Fed officials said it may be too early to be pulling back of QE certainly helps the metal,” Societe Generale analyst Robin Bhar said.
“We are getting corrective bounces but we are still in a downtrend and these bounces are not strong enough to reverse that, as investors continue to divest and physical demand is not as strong as it was one month ago.”
CHINA DEMAND
Strong demand from China, the world’s second-biggest gold consumer after India, also provided some support to the metal.
Shanghai gold prices fell slightly today but were still around US$30 higher than spot gold, indicating that Chinese demand was strong because it would be cheaper for local buyers to purchase gold from overseas.
But buying in India, the world’s top gold consumer, has been slowing as its central bank tries to rein in the country’s deficit with steps to cut gold and silver imports.
As a gauge of investor interest, holdings of New York’s SPDR Gold Trust, the largest gold-backed exchange-traded-fund, fell 0.8 per cent yesterday to 1,023.08 tonnes, the lowest in more than four years.
Spot silver gained 0.9 per cent to US$22.59 an ounce, regaining more ground after dropping to 2-1/2-year lows earlier this week.
Platinum and palladium rose 0.5 per cent to US$1,464 an ounce and US$746.97 an ounce respectively.
— Reuters
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