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Gold drifts higher

Wednesday, August 27 08:28:27

Gold edged higher on Wednesday, its third day of gains in four, but a lack of buying support from Asia, a strong U.S. dollar and firmer equities due to hopes of more stimulus from the European Central Bank are expected to check any big upside for the metal.

Bullion has struggled in August to decisively break above the psychological level of $1,300 an ounce as speculation grew about an earlier than expected increase in U.S. interest rates.

On Wednesday, gold added 0.24 percent to $1,283.70 an ounce by 0616 GMT, having jumped about 1 percent on Tuesday on chart-based buying before paring gains. Prices hit a two-month low of $1,273.06 on Aug. 21 but are still up more than 6 percent this year.

U.S. gold was flat at $1,284.50 an ounce.

The dollar hit a 13-month peak against a basket of major currencies on Wednesday, with the euro still struggling amid expectations of further policy easing from the European Central Bank.

A firm U.S. dollar makes dollar-priced bullion more expensive for holders of other currencies, and some speculators also turned to equities following the release of U.S. data on durable goods and consumer confidence.

Speculation is growing that the European Central Bank is preparing a programme of large-scale asset purchases to weaken the euro and try to jump-start growth in the struggling euro zone.

Holdings of the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund and a gauge of investor demand, fell 0.4 percent to 797.09 tonnes on Monday from 800.08 tonnes on Friday. (Reuters)

For more visit: www.businessworld.ie