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Gold Ticks Up On Weaker Equities, Dlr; Technical Support Helps
Gold bars are displayed at South Africa's Rand Refinery in a file photo. PHOTO BY REUTERS/Siphiwe Sibeko
By A. Ananthalakshmi
12/12/2013
SINGAPORE (Reuters) - Gold inched up on Thursday as some safe-haven bids emerged after equities and the dollar dropped on fears over an early end to the Federal Reserve's monetary stimulus.
Although gold will also hurt from a stimulus tapering, prices are finding strong technical support at the $1,250 an ounce level, which the metal had reached earlier this week on strong short-covering.
Spot gold was up 0.2 percent at $1,253.30 an ounce by 0321 GMT, not too far from a three-week high of $1,267.26.
Many believe the recent gains - about 2 percent so far this week - will not be sustainable, especially with a Fed policy meeting looming.
"The short covering gains will not hold as we haven't seen any follow-through buying by funds based on fundamentals," said a precious metals trader in Hong Kong.
"With the tapering coming up, it is not wise to build up your metals position."
Strong economic data this year has prompted Fed officials to believe that they could begin tapering the central bank's $85 billion in monthly bond purchases. However, the exact timing has not been decided.
The Fed holds its final policy meeting of the year next week and markets believe the agreement on the U.S. budget reached earlier this week could make it comfortable enough to start cutting back stimulus immediately.
Asian shares slipped to a 2-1/2 month low on Thursday, while the U.S. dollar was dangling near a six-week low against a basket of major currencies on those fears.
Outflows from gold-backed funds continued with SPDR Gold Trust, the world's largest gold ETF, losing 2.10 tonnes on Wednesday.
The ETF now holds 833.61 tonnes of bullion - its lowest since early 2009.
U.S. data on jobless claims and retail sales later today could set the tone for prices heading into the Fed meeting on December 17-18.
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