Gold climbs but stays below USD 1400 as Fed and India in focus
Reuters report that gold edged higher as investors looked for bargains after a sharp drop in the previous session, but it stayed below the key level of USD 1,400 an ounce as upbeat US data dented its appeal as an alternative investment.
Robust US auto sales numbers reinforced expectations the US Federal Reserve would start to cut back its stimulus later this month. The central bank's three quantitative easing schemes have buoyed prices of bullion and other commodities.
Gold had raised USD 1.79 to USD 1,392.63 an ounce by 0336 GMT after falling 1.5% on Wednesday. It rallied to its highest in more than three months around USD 1,433 in late August on safe having buying as the United States and its allies looked set to launch military strikes on Syria.
Mr Joyce Liu an investment analyst at Phillip Futures in Singapore said that "If we break through the critical support level of USD 1,380 prices will go all the way down to at least USD 1,353. For now they are many issues surrounding gold which are offsetting each other."
He said that "I think the most prominent issue is the US Federal Reserve meeting. The economy seems to be expanding that provides the ground for them to taper the stimulus."
US gold was up USD 2.90 at USD 1,392.90 an ounce. Gold buyers lined up to restart imports on Wednesday as the customs department clarified new rules, putting the world's biggest consumer back in the market after a six week gap and threatening government efforts to underpin the rupee.
Physical dealers said that but there have not yet been any fresh enquiries from India even though the rupee has bounced from all time lows. Premiums for gold bars in Hong Kong edged down to USD 2 an ounce to spot London prices from USD 2.50 in late August.
The thing is that the import tax is still high in India, so I think that is dampening their buying interest. Also gold prices are still high at close to USD 1,400.
Source – Reuters