Gold price hovers near highest in almost 7 months

by **hlk** Tue 18 Sep 2012, 09:21

SINGAPORE: Gold held near an almost seven-month high, as the US
Federal Reserve's latest stimulus move to spur the economy led to a
rush for bullion a traditional hedge against inflation.
Gold,
which has risen for the last four weeks, could breach this year's peak
around US$1,790 an ounce as the United States prints more money to buy
assets, driving up the outlook for inflation and weighing on the dollar.
Gold
added US$5.33 an ounce to US$1,774.79 after rising as high as
US$1,777.51 on Friday, its highest since late February when it hit this
year's peak.
“Gold is still pretty bullish this week. I think
gold prices will remain firm and probably test the high set in
February,” Lynette Tan, an analyst at Phillip Futures in Singapore.
“Buyers are still buying gold, but it seems that profit taking may
occur later.”
A Reuters poll showed the Fed will buy a
total US$600bil of bonds under its new stimulus programme, known as
quantitative easing or QE3, and will look for a US unemployment rate of
7% before it halts the programme.
US gold for December rose
0.28% to US$1,777.60 an ounce as the dollar languished near a
seven-month trough versus a basket of major currencies.
The
dollar index stood at 78.878, having fallen as far as 78.601 on Friday,
a level not seen since late February. It has shed some 6% from a
24-month high of 84.100 in July. A softer dollar makes commodities
priced in the greenback cheaper for holders of other currencies.
Silver
tracked gold higher and held near its strongest since March. Platinum
was near multi-month highs even after Anglo American Platinum said it
wouold resume work this week at its strike-hit Rustenburg operations.
Higher
prices spurred selling in the physical sector, but bullion was likely
to find support at around US$1,750 an ounce, dealers said.
“We've
seen some selling, but it's not heavy. We saw early selling from the
Middle East this morning, but Thailand and Indonesia are a bit quiet,”
said a dealer in Singapore.
“Premiums are still at 20 to 40
cents. You can't go cheaper than this because the premiums are already
low. But we expect more selling this week. Thai may be selling more
gold scraps.” - Reuters