|Gold flat, demand strong after post-Fed rally|
|Monday, 17 September 2012 15:06|
Gold traded flat on Monday as the market took a breather after the previous session's rally to a six-month high, while analysts said resilient bullion demand following the U.S. Federal Reserve's stimulus suggests the metal has room to rise further.
Bullion inched up on Monday after the Fed last week unleashed a third round of bullion-friendly bond-buying known as quantitative easing (QE), lifting the traditional inflation hedge to a fourth straight week of gain for the first time since January.
"Using QE2 as guidance for potential gains for gold prices, gold is likely to have priced in the bulk of its move higher," said Suki Cooper, precious metals analyst at Barclays Capital.
Cooper said that, however, a pick-up in physical demand in China and India and record-high holdings in gold-backed exchange-traded products suggest the metal is likely to hold onto its recent strength.
Spot gold edged up 31 cents at $1,769.77 an ounce by 12:02 p.m. EDT (1602 GMT), having risen by 2 percent last week.
The metal has gained 10 percent since late August on hopes that central bank stimulus around the world would stimulate a stagnant global economy.
"The market has to consolidate the gains it has made since the end of August," Peter Fertig, a consultant for Quantitative Commodity Research, said.
U.S. COMEX gold futures for December delivery were down 30 cents at $1,772.40 an ounce, with trading volume set to finish sharply below average, preliminary Reuters data showed.
Analysts said the U.S. central bank's unprecedented move to tie in monetary stimulus to economic conditions should benefit gold.
A Reuters poll showed the Fed will buy a total of $600 billion of bonds under its new stimulus program and will look for a U.S. unemployment rate of 7 percent before it halts the program.
Gold has risen by 13 percent so far in 2012, putting it on course for a twelfth yearly price increase.
Among other precious metals, silver eased 0.4 percent at $34.44 an ounce. Platinum dropped 0.5 percent to $1,686.74 an ounce, while palladium fell 1 percent to $690.22.