Gold shoots up on sentiments Fed will keep stimulus in place
Published May 23, 2013 12:52PM ET
On the Comex division of the New York Mercantile Exchange, gold futures for June delivery were up 1.36% at USD1,386.05 a troy ounce in U.S. trading on Thursday, up from a session low of USD1,355.55 and down from a high of USD1,396.55 a troy ounce.
Gold futures were likely to test support USD1,353.55 a troy ounce, Wednesday's low, and resistance at USD1,413.05, Wednesday's high.
Federal Reserve Bank of St. Louis James Bullard said earlier that the U.S. central bank wasn't "that close" to scaling back stimulus measures.
Stimulus tools such as the Fed's monthly USD85 billion bond-buying program weaken the dollar to spur recovery, and talk of their staying in place can weaken the greenback quickly and sent gold climbing.
Gold and the U.S. dollar tend to trade inversely from one another.
On Wednesday, Federal Reserve Chairman Ben Bernanke told Congress stimulus measure will stay in place though he added they could come up for review "in the next few meetings" if the labor market makes noted improvements.
Also on Wednesday, the Fed released the minutes of its two-day monetary policy meeting that began April 30, which revealed that some Fed authorities favored scaling back asset purchases as early as June, which strengthened the dollar until Bullard's comments rekindled talk that stimulus stays in place for now.
Soft manufacturing data out of China also convinced investors the world economy faces headwinds and will require continued monetary support.
A preliminary reading of China’s HSBC manufacturing PMI fell to 49.6 from a final reading of 50.4 in April, missing market expectations for a 50.5 reading.
Elsewhere on the Comex, silver for July delivery was down 0.30% at USD22.405 a troy ounce, while copper for July delivery was down 2.22% and trading at USD3.306 a pound.
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Written By: Investing.com
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