Gold price slips as traders weigh outlook for Fed interest rate cuts
Bullion traded near $2,626 an ounce in thin trading after closing 1.1% higher on Friday.
Gold futures hit another record high of $1,898.60/oz on Monday, despite a recovery on global stock markets following one of the most volatile weeks in trading history.
The precious metal rose by more than 6% last week, the most since February 2009. So far this year bullion has gained roughly a third in value.
Gold’s allure as an inflation hedge was boosted by renewed talk that policy-easing initiatives would be unveiled by the US Federal Reserve on Friday at an annual gathering of central bankers. A round of asset purchases that eventually became known as “QE2” were unveiled at the meeting last year.
Gold for December delivery eased back from the early highs to trade at $1,887.00 per ounce, still up more than $34 from Friday’s close. Silver for September delivery gained $1.38, or 3.3%, to $43.81 an ounce in early trading Monday. Platinum futures for October delivery advanced $20.80, or 1.1%, to $1,895.70 an ounce on the New York Mercantile Exchange, after touching $1,901.90, the highest level since July 17, 2008. The metal gained for the 11th straight session, the longest rally since October 2007.
Bloomberg quotes Peter Fertig, the owner of Quantitative Commodity Research Ltd. in Hainburg, Germany: “Gold is still the safe haven, and as long as people fear recession in the U.S. and euro-zone debt problems, gold remains in demand.”
MarketWatch quotes Societe General’s Aneta Markowska: “Expectations are high, but those looking for an outright commitment to QE3 are likely to be disappointed. QE3 may well happen eventually, but the Fed will likely use up more conventional and less controversial tools first.”
