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COMMODITIES GOLD: WILL RISK SHIVER AVERSION AFTER BANISH U.S. CREDIT CORRECTION DOWNGRADE FEARS? AUGUST 2011
Gold edges down; eyes on Fed cues on stimulus
By Rujun Shen
SINGAPORE, Aug 31 (Reuters) -
S pot
gold edged lower on Wednesday as investors waited for more clues to economic conditions and watched to see if
the U.S. Federal Reserve would deploy more stimulus measures, but the metal is poised for its biggest monthly gain
since Nov. 2009.
Cash gold prices rallied 2.6 percent in the previous session as minutes from a Fed policy meeting on Aug. 9 showed
the central bank discussed a range of unusual tools it could use to help the economy and more quantitative easing remains an
option.
More quantitative easing would push up the inflation outlook and spur buying interest in gold, which is seen as a good hedge
against inflation.
"The next data point for gold is some sort of clarity out of the U.S. Fed over the next few weeks on whether they will deliver
another round of quantitative easing, or not and just let their economy continue on a slow growth path rather than a supported
high growth path," said Tom Price, global commodity analyst at UBS.
The Fed is scheduled to meet on Sept. 20 to discuss options to help spur the faltering U.S. economy.
Spot gold inched down 0.2 percent to $1,833.29 an ounce by 0254 GMT, headed for a monthly rise of 13 percent, its strongest
gain since November 2009. It has risen nearly 30 percent so far this year, close to the gain for all of 2010.
U.S. gold gained 0.4 percent to $1,836.50 an ounce, also on course for a 13-percent rise from a month earlier.
Technical analysis suggested that gold could rise to $1,862 in the day, said Reuters market analyst Wang Tao.
Gold 24-hour technical outlook:
( http://link.reuters.com/weg53s )
Inflation adjusted gold price: ( http://r.reuters.com/pun62s )
Investors are eyeing a string of labour market data due later this week, including unemployment and non-farm payrolls data
on September 2, after the latest data showed plunging consumer confidence in August.
In the absence of a third round of quantitative easing by the Fed, gold's rally will run out of steam and prices could drop towards
the $1,400-$1,500 level from which the rally took off in early July, said Price of UBS.
A gold bar of melted gold granules is cast at the Austrian Gold and Silver Separating Plant 'Oegussa' in Vienna August 26, 2011. REUTERS/Lisi Niesner
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