Gold steady above $1,700/oz, eyes on Fed meeting

Dec 10 2012, 10:16 IST
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Gold traded steady as a drop in US unemployment rate did little to dampen outlook for easy monetary policy. (Reuters) Gold traded steady as a drop in US unemployment rate did little to dampen outlook for easy monetary policy. (Reuters)
SummaryGold traded steady as a drop in US unemployment rate did little to dampen outlook for easy monetary policy.

Gold traded steady above $1,700 an ounce on Monday, as a drop in the U.S. Unemployment rate did little to dampen the outlook for easy monetary policy, which is expected to be reaffirmed at a Federal Reserve meeting later this week.

Investors are watching progress in the U.S. fiscal talks and potential political uproar in Italy, which could jolt the market where liquidity is starting to thin as traders close books before the end of the year.

The slow improvement in the U.S. job market and prospects for more cash printing by the Federal Reserve kept sentiment buoyant in gold, which has risen about 9 percent this year, mostly on the Fed's stimulus measures.

Investors await a U.S. Federal Reserve policy meeting on Tuesday and Wednesday, after which the central bank is expected to announce fresh bond purchases of $45 billion a month to replace Operation Twist, the Fed's program of buying longer-dated bonds with sale proceeds from shorter date holdings, due to expire at the end of the year.

"Market expectation is that there could be more quantitative easing towards the end of the month, and this will be supportive of gold," said Lynette Tan, an analyst at Philip Futures in Singapore.

But Tan said gold was likely to remain trapped in a range between $1,680 and $1,750 an ounce as many investors have moved to the sidelines watching the progress of talks in Washington to avert the "fiscal cliff", $600 billion worth of tax hikes and spending cuts due to kick off next year that is feared would trigger another recession.

Spot gold was little changed at $1,705.59 an ounce by 0312 GMT, trying to stand firm above the 100-day moving average at $1,702.64. U.S. gold was almost flat at $1,704.20.

Hedge fund and money managers cut their bullish bets on U.S. gold last week to the lowest level since late August, and also reduced silver longs, data from the U.S. Commodity Futures Trading Commission showed.

But some investors continued to pile into gold-backed exchange-traded funds. Holdings of gold ETFs hit a record high of 76.129 million ounces on Dec. 7, despite stagnant gold prices in recent weeks.

The brightened economic outlook in China after data over the weekend showed eight-month highs in factory output and retail sales in November helped support platinum group metals.

Platinum and

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