Gold extends gains to near 3-month high
Singapore, February 11, 2014
Spot gold climbed to its highest in nearly three months on Tuesday, as investors look for hints from the new Federal Reserve chief later in the session on whether the pace of its stimulus tapering may be slowed.
US gold futures rose 1 percent, gaining for a fifth day in a row, in the longest winning streak since August 2012.
Prices were also supported by a weaker US dollar, which was wallowing near a two-week low against a basket of major currencies.
Fed chair Janet Yellen gives her first testimony before the House Financial Services Committee at 1500 GMT, and will likely face questions on the state of the labour market and the future pace of tapering.
Recent weak economic data, including Friday's nonfarm payrolls report, has many in the market anticipating that the wind down of the bond-buying stimulus would be slowed.
"A hint of a Fed pause is not entirely out of the question given the weak unemployment data we have been getting of late, coupled with a slew of other manufacturing statistics that are pointing to further deceleration," INTL FC Stone analyst Edward Meir said.
If Yellen does indicate that the Fed could pause the tapering due to deteriorating economic conditions, it would trigger a rally in both gold and US equities, breaking the recent inverse relationship between the two, Meir said.
Spot gold was up 0.8 percent at $1,283.95 an ounce by 0745 GMT, after gaining 1.4 percent in the past two sessions.
The metal rose as much as 1 percent to $1,287.01 earlier in the session - the highest since mid-November.
US gold futures for April delivery rose as much as 1 percent to $1,287.50 - also the highest in almost three months. - Reuters