Gold gains after Yellen comments support Fed stimulus * Gold up for second session * Yellen says Fed has more work to do to aid U.S. recovery * SPDR holdings dip for the first time nearly 2 weeks Gold extended gains into a second session on Thursday after the nominee for U.S. Federal Reserve chairman, Janet Yellen, suggested the central bank would continue with monetary stimulus measures. Yellen, in remarks prepared for her nomination hearing before the Senate Banking Committee later on Thursday, said the U.S. jobless rate was still too high and that both the labour market and economy were performing far short of potential. Spot gold rose 0.4 percent to $1,283.60 an ounce by 1048 GMT, after snapping a four-day losing streak on Wednesday with a gain of nearly 1 percent. Gold has strengthened after a dovish statement from Yellen signalling that she would allow the economy to continue to grow before tapering, Natixis analyst Bernard Dahdah said. But I expect the dollar to keep rising in the next few weeks and this rebound of gold to be temporary, because if the economy improves, the opportunity cost of holding gold would increase. U.S. gold futures for December delivery advanced as much as 1.2 percent to $1,283.10 an ounce. The dollar index held steady versus a basket of currencies, but yields on U.S. 10-year Treasury bonds fell to 2.7 percent, compared with a near two-month high of 2.792 percent hit earlier in the week. Given that gold pays no interest, movements in returns from U.S. bonds are closely watched by the bullion market and also impact the U.S. currency. The Feds $85 billion in monthly bond purchases have been a major support for gold prices in recent years as a hedge against inflation. Bullion prices have lost a fifth of their value this year after the central bank suggested that it could begin tapering back its monetary stimulus soon, depending on the strength of the economy. A run of mixed U.S. data over the past few months, however, has had investors constantly second-guessing the central banks intentions, increasing the volatility of gold prices. In another gauge of investor sentiment, outflows from SPDR Gold Trust, the worlds biggest gold-backed exchange-traded fund, resumed on Wednesday after pausing the previous two weeks. Holdings in the fund fell 2.71 tonnes to a fresh four-year low of 865.71 tonnes. They had remained largely unchanged for most of November on uncertainty over the stimulus. Demand for the physical metal has picked up as gold trades below $1,300 an ounce but has not been strong enough to provide upward impetus to prices, traders said. The World Gold Council on Thursday cut its outlook for Indian demand in 2013 to around 900 tonnes from the 1,000 tonnes predicted previously as strict import rules introduced by New Delhi bite, while keeping its forecast for China unchanged at 1,000 tonnes. Silver rose 0.8 percent to $20.75 an ounce. Spot platinum was up 1.1 percent at $1,446.24 an ounce on continued supply disruptions in top world producer South Africa. Spot palladium rose 0.9 percent to $736.25 an ounce.
Posted on: Thu, 14 Nov 2013 11:13:22 +0000
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