Singapore: Gold edged up on Thursday and held near its highest in a week, supported by signs of a recovery in the Eurozone and by expectations the US dollar could lose its footing after the Federal Reserve decided to keep buying bonds.
Previous rounds of asset purchases by the Fed drove down interest rates and weakened the greenback, spurring rallies in global stocks and prompting investors to turn to gold as a hedge against inflation.
Gold had risen 0.2 per cent to $1,680.06 (Dh6,170.86) an ounce by 0630 GMT. It hit a near one-week peak of $1,683.39 on Wednesday, although that was still well below a record of around $1,920 marked in September 2011.
“The Fed will maintain its bond-buying policy and we see economic conditions in the Eurozone improving slightly. I think we can see more weakness in the US dollar and as a result we may see gold going up a bit more,” said Joyce Liu, investment analyst at Phillip Futures in Singapore.
US gold was little changed at $1,679.50 an ounce.
Gold is still facing strong resistance at $1,700, which it failed to breach despite repeated attempts earlier in the month, Liu and other analysts have said.
Technical analysis suggested spot gold could drop to $1,659-$1,664 range during the day, as it has completed a rebound from Monday’s low of $1,651.93, said Reuters market analyst Wang Tao.