Gold rebounds as dollar weakens

Singapore: Gold gained half a per cent yesterday, supported by the weakness in the dollar, after minutes of a Federal Reserve meeting showed monetary easing might be needed soon, while palladium rose to its highest level in a week.

US Federal Reserve officials believed in September the struggling recovery might soon need more help, and they discussed several ways to provide support, including the possible adoption of a price-level target.

The dollar paused its rebound and edged lower against a basket of currencies on Wednesday.

Bullion has been trading in a narrow range of less than $20 (Dh73.40) this week, and is seen to be consolidating after a record-breaking rally took gold to an all-time high of $1,364.6 last week. Bullish sentiment is intact, traders and analysts said.

"There's been a lot of positive sentiment run by the dollar weakness fuelled by the possibility of QE [quantitative easing]," said Mark Pervan, senior commodities analyst at ANZ.

He added that the accommodating stance in the US monetary policy would propel precious metals to new record highs.

"The markets are buying on a dip, and pushing things higher. [For gold,] $1,400 is probably on the radar for the next two to three months. No problem."

Spot gold rose 0.5 per cent to $1,356.55 an ounce by 0305 GMT, regaining ground lost in the previous session.

US gold futures for Dec-ember delivery gained 0.8 per cent to $1,357.5. Physical demand remains strong, and scrap selling is scarce, as market players bet on a further rally in prices, dealers said.

Waiting

"We have not seen much gold scrap being sold to the market. People are waiting for higher prices," said a Hong Kong-based dealer. "Physical demand is still at a high level."

Gold is technically neutral as it is rangebound between $1,340 and $1,357, and a further development of the chart is needed to confirm its next move, said Wang Tao, a Reuters market analyst.

Spot palladium rose as much as 2.3 per cent to a one-week high of $593.50 an ounce before easing to $588.50.