PRECIOUS-Gold flat near 6-1/2-month high, stimulus supports
posted on
Sep 24, 2012 09:07AM
New Discovery Resulting in a 20KM Mineralized Gold Belt
* Gold holds up in heavy volume despite tumbling crude oil
* Bank of Japan to boost asset purchases supports
* Platinum edges up a day after tumbling on mine strike end
* Coming up: U.S. jobless claims Thursday (New details throughout, updates comment, changes byline, dateline, previously LONDON)
By Frank Tang
NEW YORK, Sept 19 (Reuters) - Gold traded flat on Wednesday, hovering near a 6-1/2 month high hit in early trade, buoyed by monetary stimulus from central banks around the world despite pressure from tumbling crude oil prices.
Turnover in U.S. gold futures was higher than usual after the Bank of Japan became the latest major central bank to ease monetary policy with a new round of asset buying.
Last week, gold posted its fourth straight weekly rise after the Federal Reserve unveiled a third round of bond-buying, called quantitative easing or QE3. Earlier, the European Central Bank pledged to launch its own new bond-buying program.
"While we expect QE3 to be supportive of gold prices, much will depend on how QE3 plays out in the fixed income markets and how it impact the euro-dollar," said James Steel, metals analyst at HSBC.
Steel said he was impressed that gold's price stayed high despite slumping crude oil and recent weakness in the euro and platinum. Some have warned that gold may not rise as much during QE3 as it did during two earlier rounds of quantitative easing. (Past QE market reaction: http://link.reuters.com/pym62t)
Spot gold was down 77 cents at $1,772.46 an ounce by 11:27 a.m. EDT (1527 GMT), after hitting a 6-1/2 month high of $1,779.10, around $10 below the 2012 high of $1,790.30.
BNP Paribas analyst Anne-Laure Tremblay said monetary easing by central banks should continue until economic growth improves substantially. She said subdued inflation in developed countries gives central banks more latitude for economic stimulus.
Last Thursday, the Fed said it would buy $40 billion of mortgage-backed debt each month until the U.S. jobs outlook improved substantially, as long as inflation remained contained.
Market watchers said the shifting focus to employment was bullish for gold, a traditional inflation hedge.
Brent crude oil futures slid to a six-week low as traders braced for a potential supply boost from the world's largest oil exporter, Saudi Arabia. Still, U.S. COMEX gold futures for December delivery were down only $1.50 an ounce at $1,769.70. Trading volume surpassed the 30-day average, preliminary Reuters data showed.
Interest in gold exchange-traded funds - popular investment vehicles for bullion which issue securities backed by physical metal - has been strong this week, with gold ETF holdings rising to an all-time high at 73.681 million ounces.
Among other precious metals, silver was down 0.5 percent at $34.62 an ounce, while platinum group metals rebounded from the previous session's sharp pullback.
On Tuesday, platinum posted its biggest one-day fall since March, after striking miners at major South African platinum producer Lonmin said they would return to work after six weeks of labor unrest during which 45 were killed.
Spot platinum climbed 0.9 percent to $1,632.24 an ounce, and palladium was up 0.8 percent at $668.30 an ounce. (Additional reporting by Jan Harvey in London; Editing by David Gregorio)