By: Reuters
Spot 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.
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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![[cnbc explains]](https://lh3.googleusercontent.com/blogger_img_proxy/AEn0k_syuYBtGzjLe8W9Fk5fClOhG790s5E89cRSuW3RHwMqiRksLq52k-NOFdOq-9qbu1LZWEo5515kuLjaEysCN_Tv0zez3m3d3WE371DMOLEgZipK83xMKPJv1Feei9Y7e-Ta5avWsVzofCeFoagMOlTMk3L6qfleILyaVd9LTpuCMy2iNX1jDnEOl0cKtBcqew=s0-d)
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 [XAU= 1835.45
-1.75 (-0.1%) 
] 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 [GCCV1 1835.60
5.80 (+0.32%) ] 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.
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 [XAU= 1835.45
-1.75 (-0.1%) ] 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 [GCCV1 1835.60
5.80 (+0.32%) ] 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.
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Investors are eyeing a string of labor 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.
Asia Physical Appetite Strong
Lofty prices have barely shaken Asian investors' interest in bullion, and upcoming festivals in China and India are expected give a further boost to gold demand.
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.
Asia Physical Appetite Strong
Lofty prices have barely shaken Asian investors' interest in bullion, and upcoming festivals in China and India are expected give a further boost to gold demand.
"We are seeing strong demand from China," said a Hong Kong-based dealer, "Physical demand is likely to be strong in September, October and November."
India, the world's largest gold consumer, is approaching the festival and wedding season which peaks in late October's Deepavali.
Retail interest in gold is also expected to rise in China ahead of the week-long National Day holiday in early October.
Spot silver [XAG= Loading... ()] was little changed at $41.33, headed for a 3.8-percent rise in August, the second month of straight gains.
India, the world's largest gold consumer, is approaching the festival and wedding season which peaks in late October's Deepavali.
Retail interest in gold is also expected to rise in China ahead of the week-long National Day holiday in early October.
Spot silver [XAG= Loading... ()
] was little changed at $41.33, headed for a 3.8-percent rise in August, the second month of straight gains.Copyright 2011 Thomson Reuters. Click for restrictions.
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