Gold climbs as Fed official says no rush to end bond buying

SINGAPORE, May 24 — Gold rose on Friday, on track for its strongest week in a month, after a US Federal Reserve official said there was no rush to end the monetary easing programme that has increased the metal’s appeal as a hedge against inflation.

Source from (The Malaysian Insider): http://www.themalaysianinsider.com/business/article/gold-climbs-as-fed-official-says-no-rush-to-end-bond-buying/
Published: May 26, 2013


Gold bars are displayed at the Ginza Tanaka 
store in Tokyo April 18, 2013. — Reuters pic

Gold edged up this week as investors sought its safe-haven status after the dollar and equity markets were hit by factory data from China and the United States that showed the pace of manufacturing had slowed.

Spot gold rose 0.16 per cent to US$1,392.96 (RM4,179) an ounce by 0646 GMT, but was still within sight of a two-year low near US$1,321 hit in mid-April.

US gold was little changed at US$1,391.60.

Gold has been hammered this year, losing nearly a fifth of its value, as investors favoured stocks and other risk assets on the back of strong economic data.

“Gold prices will be stuck in a range for a while, trading below US$1,400-US$1,410 an ounce,” said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

Global financial markets were spooked earlier this week when Fed Chairman Ben Bernanke said the US central bank could decide to start scaling back on its US$85 billion in monthly bond purchases in the next few meetings.

But Bernanke also said the US economy had to show more signs of progress before the Fed would make that move, helping gold stay on track for a more than 2 per cent gain this week.

St Louis Fed President James Bullard said yesterday he did not think the Fed was “that close” to taking any such decision, tempering the concern that the bank would move quickly to end its easy money policy.

Bullard said on Friday that the US inflation would have to pick up before he voted to scale back monetary policy stimulus and that this was unlikely to happen in the coming month.

“Despite Bernanke dancing around the question of when the stimulus will be removed, at this stage, the move is more of a matter of when rather than if. When it does occur, it could knock out a key prop from under the gold market going forward,” said Edward Meir, an analyst with INTL FCStone.

Dealer Leung said the Chinese had slowed down physical buying ahead of US durable goods data later in the day.

Buyers in China had been active earlier this week lured by lower prices, helping to push premiums to record highs in Hong Kong and Singapore.

Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell to fresh four-year lows of 1,018.57 tonnes yesterday. — Bernama