Gold edges lower as stronger dollar weighs

Tuesday, 19 October 2010 23:37 -     - {{hitsCtrl.values.hits}}

(Reuters) - Gold edged lower on Tuesday, pressured by a stronger dollar, but anticipation of further monetary easing by the U.S. central bank is likely to keep sentiment bubbling.

The dollar rose more than half a percent against a basket of currencies, extending gains made in the previous session after Treasury Secretary Tim Geithner said the U.S. would not engage in dollar devaluation.

“Gold is likely to continue the rally before the Federal Reserve meeting in early November. Unless the Fed announces quantitative easing to a huge extent, gold will retrace,” said Zhu Yilin, general manager of the research and development department of Jingyi Futures in Shanghai.

“It’s all about buying the anticipation. Once the result is out, it’s time to close positions.”

U.S. industrial output shrank last month for the first time in more than a year, a sign the economy was in a slow-growth rut that appears certain to lead to more stimulus from the central bank.