Gold up 1 percent at 3-1/2-month high on ECB stimulus talk

NEW YORK Tue Aug 21, 2012 10:19pm IST

Gold bars are displayed at a gold jewellery shop in the northern Indian city of Chandigarh April 11, 2012. REUTERS/Ajay Verma

Gold bars are displayed at a gold jewellery shop in the northern Indian city of Chandigarh April 11, 2012.

Credit: Reuters/Ajay Verma

NEW YORK (Reuters) - Gold rose to its highest since May on Tuesday, gaining 1 percent, on speculation the European Central Bank will act to help Spain and Italy, while platinum also hit a 3-1/2 month high as violence at a South African mine raised concerns about supplies.

The yellow metal, on track to post its biggest one-day rise in almost a month, extended its rally to a fifth straight session on reports the ECB was moving to ease Spanish and Italian borrowing costs.

Technical support helped as gold rose above its 100-day moving average, but analysts said its 200 DMA could form the next resistance. Bullion buying also was fueled by a four-year high on Wall Street and sharp gains in other commodities led by crude oil and grains.

"There is still an overriding fear that the equities markets have appreciated beyond the point of sustainability so there is a level of fear and desire for diversification into gold," said Jeffrey Sica, chief investment officer at SICA Wealth Management.

"The economic numbers around the world have not proven to justify a recovery without the anticipated liquidity created by central banks," said Sica, whose firm manages $1 billion in assets.

Spot gold hit a high of $1,641.20 an ounce, the highest since May 7. It was up 1.1 percent at $1,637.71 an ounce by 12:01 p.m. (1601 GMT).

U.S. gold futures for December delivery were up $17 at $1,640, with trading volume largely on track to finish near its 30-day average, preliminary Reuters data showed.

Silver was up 1.7 percent at $29.26 an ounce. Earlier in the session, it reached its highest since early June at $29.42 an ounce.

Talk of more stimulus ran rampant as Greece's prime minister will meet German Chancellor Angela Merkel, French President Francois Hollande and Eurogroup chief Jean-Claude Juncker this week to try and secure more funding from the European Union, International Monetary Fund and ECB.

Traders referred to a story in Britain's The Daily Telegraph newspaper, which said it could confirm earlier reports in German media that ECB experts were examining plans to effectively cap Spanish and Italian bond yields.

However, an ECB spokeswoman, when asked about the Telegraph story, referred back to the ECB's statement on Monday when it said it was misleading to report on policy decisions that had not been taken.

(2012 asset returns: link.reuters.com/muc46s)

PLATINUM HITS HIGHEST SINCE MAY

Platinum touched its highest since early May at $1,508.25 an ounce and was last at $1,498.49 an ounce, up 0.9 percent. Its recent rise has made it this year's best performing precious metal, up more than 7 percent.

Platinum has been the biggest climber of the last seven days, up more than $120 an ounce week-on-week on Tuesday, due to violence that killed more than 40 people at a mine operated by Lonmin, the world's third-largest platinum producer.

Spot palladium rose 2.4 percent at $617.75 an ounce. It also rode gold and platinum's coat-tails to its highest since late June on Tuesday at $621.25,

(Additional reporting by Jan Harvey in London; Editing by Bob Burgdorfer)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Public Health

REUTERS SHOWCASE

Airtel Profit Jumps

Airtel Profit Jumps

Bharti Q2 net profit more than doubles   Full Article 

Maruti Earnings

Maruti Earnings

Maruti Suzuki net profit up 29 percent, beats estimates.  Full Article 

ICICI Results

ICICI Results

ICICI Bank Q2 profit up 15 percent, beats estimates.  Full Article 

Cost Cutting

Cost Cutting

PM Narendra Modi boots officials out of the first class cabin  Full Article 

Market at Record

Market at Record

Sensex, Nifty hit record highs; reforms outpace hawkish Fed.  Full Article 

Moody's on India

Moody's on India

Moody's welcomes India's policy steps, but wants to see more.  Full Article 

End Of QE

End Of QE

U.S. Fed ends bond buying, exhibits confidence in U.S. recovery.  Full Article 

Samsung Results

Samsung Results

Smartphone woes drag Samsung Elec Q3 profit to more than 3-year low.  Full Article 

Refining Margins

Refining Margins

BPCL aims to double refining margins with refinery expansion.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage