PRECIOUS-Gold set for biggest rise in eight weeks after Fed
* Fed sets gold up for biggest weekly gain in three months
* U.S. growth data eyed for impact on dollar
* Silver set for 20 pct rise in Dec, biggest since April
* Platinum eyes largest monthly rise since Feb 2008
(Updates prices, adds comment)
By Jan Harvey
LONDON, Jan 27 (Reuters) – Gold rose on Friday,
heading for its best weekly performance since late October after
the Federal Reserve signalled its ultra-loose monetary policy
would continue, keeping the dollar under pressure and the
opportunity cost of holding bullion low.
Silver and platinum prices were also on course for their
best monthly performances in nine months and nearly four years
respectively in January, tracking gains in gold, stocks and
other commodities.
Spot gold was up 0.5 percent at $1,727.81 an ounce at
1500 GMT and has risen 10 percent this month, recouping
December’s hefty losses. It is up 4.2 percent this week alone,
its biggest one-week gain since the week ending October 30.
The metal surged to a seven-week high just below $1,730 an
ounce on Thursday after the Fed said it planned to keep interest
rates on hold until at least 2014 and signalled it would be
ready to take further measures to stimulate the economy.
“The Fed’s announcement that it would keep its rates
exceptionally low until 2014 was… clearly not fully priced by
the market,” said BNP Paribas analyst Anne-Laure Tremblay. “Real
interest rates are likely to stay negative in the U.S. in the
next two years, which will be supportive of the gold price.”
The dollar eased 0.3 percent against the euro, further
helping gold, which usually benefits from weakness in the U.S.
unit. The euro hit a five-week high on Thursday.
The U.S. currency briefly recovered against the euro after
data showed the U.S. economy grew at its fastest pace in 1-1/2
years in the fourth quarter of 2011, but its rise failed to gain
traction.
The euro itself remains under pressure from concerns over
euro zone debt, as the markets awaited a breakthrough in Greek
debt talks. Athens was in negotiations with private creditors to
restructure its debt.
The European Union and IMF want Greece to push through more
budget cuts and implement a series of austerity reforms before
they agree on any new bailout the country needs to avert
bankruptcy, a report obtained by Reuters showed.
NEW CATALYST
The debt crisis was a major driver of higher gold prices
last year, as investors bought the metal as insurance against a
worsening outlook for the euro zone. However, its rally stalled
in late 2011 as investors became acclimatised to the situation.
“The market attitude towards gold for most of January could
be summed up in two words: cautious optimism. Investors were
reluctant to add to positions aggressively as memories of the
disappointment in Q4 lingered,” said UBS in a note.
“A fresh catalyst was needed and we think the FOMC outcome
on Wednesday fit the bill. More accommodative policy is a very
good foundation for gold to build on the next move higher.”
U.S. gold futures for February delivery were up 90
cents at $1,727.60 an ounce. Among other precious metals, silver
was little changed at $33.40 an ounce.
Silver is on track for a near 20 percent rise in January,
its biggest one-month gain since April 2011, when it rallied to
a record $49.51 an ounce. Caution has dominated the market since
then, as the all-time high was followed by a sharp correction.
Spot platinum was up 0.1 percent at $1,605.49 an
ounce, while palladium was down 0.6 percent at $683.47.
Platinum has outperformed palladium this month, climbing 15
percent for its biggest one-month rise since February 2008.
“If the advanced economies can manage to collectively
maintain even minimal growth in 2012… and global vehicles
sales can eke out another year of gains as projected, platinum
prices could continue to firm at least through the first half of
the year,” said A1 Specialized Services Supplies, the world’s
biggest PGMs recycler from autocatalysts, in its January note.
“There has also been evidence in recent weeks that investors
have begun to buy platinum and sell gold in expectation of a
correction in the historically low ratio.” Gold’s unusual
premium over platinum has narrowed to around $120 an ounce from
a record near $230 an ounce on Jan. 6.
South Africa’s chief mine inspector, David Msiza, on Friday
defended safety-related mine closures that have cut into
production at the world’s top platinum producers including
Lonmin and Anglo American’s Anglo Platinum.
(Editing by Alison Birrane)
Article source: http://www.reuters.com/article/2012/01/27/markets-precious-idUSL4E8CR3AO20120127
