Gold dips but holds firm on talk Fed to keep monetary policy loose
Published Oct 18, 2013 12:48PM ET
Stimulus tools often weaken the dollar to drive recovery, making gold an attractive hedge.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,315.30 during U.S. afternoon hours, down 0.58%.
Gold prices hit a session low of USD1,313.40 a troy ounce and high of USD1,325.90 a troy ounce.
Gold futures were likely to find support at USD1,251.10 a troy ounce, Tuesday's low, and resistance at USD1,324.10, Thursday's high.
The December contract settled up 3.17% at USD1,323.00 a troy ounce on Thursday.
While markets breathed a sigh of relief after the U.S. Congress passed a bill to reopen the government and raise the debt ceiling this week, expectations continued to persist that the Federal Reserve may delay plans to taper its stimulus program until early 2014.
The Fed is currently buying USD85 billion in Treasury holdings and mortgage debt a month to boost the economy, a monetary policy tool known as quantitative easing that drives down interest rates to spur recovery, weakening the dollar and making gold an attractive hedge in the process.
Prior to the fiscal showdown in Washington, markets were expecting the Fed to begin tapering the pace of its asset purchases in late October or early December, though many have pushed back estimates for a start date to early 2014, possibly after current Fed Chair Ben Bernanke steps down on Jan. 31.
Profit taking wiped out gold's gains earlier Friday though the yellow metal held firm.
Separately, investors ditched the safe-haven greenback for risk-on asset classes after official data showed that China's gross domestic product grew by 7.8% in the third quarter, in line with expectations and up from 7.5% in the three months to June.
The data eased concerns over the strength of the recovery in the world's second-largest economy.
Elsewhere on the Comex, silver for December delivery was down 0.27% at USD21.888 a troy ounce, while copper for December delivery was up 0.07% and trading at USD3.299 a pound.
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Written By: Investing.com
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