Gold ticks up, Fed keeps up pressure with stimulus view

Friday, 19 July 2013 04:00 - - {{hitsCtrl.values.hits}}

Reuters: Gold inched up on Thursday after falling more than 1% in the previous session, but the metal was still under pressure as investors eye an eventual pullback in the US Federal Reserve’s stimulus program. Bullion has slipped more than 20% this year, losing its safe-haven appeal after the US central bank signalled it would look to rein in its US$ 85 billion in monthly asset purchases later this year and halt stimulus altogether by mid-2014. The Fed’s three quantitative easing schemes have buoyed prices of gold and other commodities. Fed Chairman Ben Bernanke said on Wednesday the central bank still expects to start scaling back bond purchases later this year, but he left open the option of changing

that plan if needed. Gold hit a high of US$ 1,278.86 an ounce and stood at US$ 1,275.61 by 0641 GMT, little changed from Wednesday. Prices were well below an all time high around US$ 1,920 in 2011. “We should still expect bond buying to be scaled, but maybe not that soon,” said Singapore Phillip Futures investment analyst, Joyce Liu. “We expect to see more downside in gold. I am looking for gold to break below the 12 July low around US$ 1,267 an ounce.” Bernanke will testify before the Senate Banking Committee later on Thursday, but is likely to stick to the theme laid out on Wednesday. US gold futures were at US$ 1,274.70 an ounce, down US$ 2.80. Gold’s recent weakness attracted buying in the physical sector, keeping premiums for gold bars steady in Singapore at US$ 2.50 to US$ 3 an ounce to spot London prices. But demand from top consumer India has been muted after the Government raised its import duty and stopped consignment imports, cutting imports by 81% in June.