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PRECIOUS-Gold hovers near highest in almost 7 months after Fed
September 17, 2012 / 3:23 AM / 5 years ago

PRECIOUS-Gold hovers near highest in almost 7 months after Fed

* Gold still eyes $1,785-$1,796-technicals 
    * Physical market notes selling as prices rise
    * Coming Up: Euro zone Eurostat trade for July; 0900 GMT

 (Updates prices, adds quotes)
    By Lewa Pardomuan
    SINGAPORE, Sept 17 (Reuters) - Gold firmed on Monday,
holding near an almost seven-month high, as the U.S. Federal
Reserve's latest stimulus move to spur the economy led to a rush
for bullion -- a traditional hedge against inflation.
    Gold, which has risen for the last four weeks, could breach
this year's peak around $1,790 an ounce as the United States
prints more money to buy assets, driving up the outlook for
inflation and weighing on the dollar.  
    Gold added $4.03 an ounce to $1,773.49 by 0621 GMT
after rising as high as $1,777.51 on Friday, its highest since
late February when it hit this year's peak. Gold rallied to a
record around $1,920 in September last year. 
     "Gold is still pretty bullish this week. I think gold
prices will remain firm and probably test the high set in
February," Lynette Tan, an analyst at Phillip Futures in
Singapore. 
    "Buyers are still buying gold, but it seems that profit
taking may occur later." 
    Reuters poll showed the Fed will buy a total of $600 billion
of bonds under its new stimulus program, known as quantitative
easing or QE3, and will look for a U.S. unemployment rate of 7
percent before it halts the programme. 
    "We believe the macroeconomic environment for gold is
turning more constructive. While flow into physically backed
gold ETF stalled earlier this year, the purchase of gold by
central banks accelerated," Deutsche Bank said in a report.
    "We expect that the growth in supply of fiat currencies are
an important driver, the low interest rate environment is likely
to continue to enhance gold's attractiveness given the
negligible opportunity cost."
    Fiat currencies are government-issued and their value is
based on the issuer's guarantee to pay the face amount on
demand.      
    
    U.S. gold for December rose $3.20 to $1,775.90 an
ounce as the dollar languished near a seven-month trough versus
a basket of major currencies. 
    The dollar index stood at 78.802, having fallen as
far as 78.601 on Friday, a level unseen since late February. It
has shed some 6 percent from a two-year high of 84.100 in July.
A softer dollar makes commodities priced in the greenback
cheaper for holders of other currencies.
    Silver tracked gold higher and held near its
strongest since March. Platinum was near multi-month
highs even after Anglo American Platinum said it will
resume work this week at its strike-hit Rustenburg operations.
 
    Higher prices spurred selling in the physical sector, but
bullion was likely to find support at around $1,750 an ounce,
dealers said.
    "We've seen some selling, but it's not heavy. We saw early
selling from the Middle East this morning, but Thailand and
Indonesia are a bit quiet," said a dealer in Singapore.
    "Premiums are still at 20 to 40 cents. You can't go cheaper
than this because the premiums are already low. But we expect
more selling this week. Thailand may be selling more gold
scraps."  
    In main consumer India, demand picked up last week as
jewellers and investors scaled up purchases before prices rose
further during the festive season, which peaks in November with
Diwali, the Hindu festival of lights. 
    In other markets, MSCI's broadest index of Asia Pacific
shares outside Japan crept up 0.3 percent,
having reached its highest level since early May earlier in the
session, while Brent crude rose for the eighth consecutive
session to just below $117 a barrel.  
            
  Precious metals prices 0621 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1773.49    4.03   +0.23     13.41
  Spot Silver        34.65    0.06   +0.17     25.14
  Spot Platinum    1706.24   11.24   +0.66     22.49
  Spot Palladium    694.97   -2.03   -0.29      6.51
  COMEX GOLD DEC2  1775.90    3.20   +0.18     13.35        14482
  COMEX SILVER DEC2  34.71    0.05   +0.14     24.32         4875
  Euro/Dollar       1.3134
  Dollar/Yen         78.33
 
  COMEX gold and silver contracts show the most active months
 
    

 (Editing by Himani Sarkar)
 (lewa.pardomuan@reuters.com; +65 68703834; Reuters Messaging:
lewa.pardomuan.reuters.com@reuters.net)

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