Gold held close to a three-week high on Wednesday after a near 1 percent rise in the previous session as investors awaited clear direction from the Federal Reserve regarding its stimulus measures.
Markets are focused on Fed Chairman Ben Bernanke’s semi-annual testimony to a U.S. Congressional panel later today for any clues on when it may start to taper its $85 billion monthly bond purchases.
Spot gold was little changed at $1,292.21 an ounce by 0821 GMT, hovering below a three-week high of $1,298.36 reached last Thursday. U.S. gold was up about $1 at $1,291.50.
The metal rose 0.8 percent on Tuesday after the U.S. Labor Department said its Consumer Price Index increased 0.5 percent, the largest rise since February, increasing bullion’s appeal as a hedge against inflation. Gold has swayed between sharp gains and losses over the last few weeks following mixed comments from the Fed about the likely timing of a scale-back in economic stimulus. The Fed should begin to reduce its massive bond-buying program and bring it to a close “sometime in the first half of next year,” Kansas City Fed President Esther George said on Tuesday. However, George also said should the U.S. economy grow faster than currently expected, it may be “appropriate” to reduce the bond-buying program at a faster pace.
Cyprus said on Tuesday a sale of its gold reserves was not the only option under consideration to pay down its debt and that other alternatives were being considered. News that Cyprus could be forced to offload gold triggered a steep fall in the price of the metal in April as traders worried about the precedent it could set. SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell to 937.57 tons on Tuesday, their lowest in four years.
Eldorado Gold Corp said on Tuesday it will cut 2013 capital spending by 35 percent and push back the start of various projects, making it the latest producer to curb spending in response to low gold rates.
Precious metals prices 0021 GMT
|Metal||Last||Change||Pct chg||YTD pct chg||Volume|
|COMEX GOLD AUG3||1291.5||1.1||0.09||-22.93||2529|
|COMEX SILVER SE P3||19.96||0.02||0.1||-34.15||338|