NEW YORK: Gold rose for a third session on Monday as investors were uncertain about the US budget crisis and hopeful that the Federal Reserve will unveil new economic stimulus this week.
Growing unease about Europe boosted safe-haven bids for bullion after Italian Prime Minister Mario Monti announced he would resign once the 2013 budget is approved.
Investors also bought more gold ahead of a two-day Fed policy meeting. The US central bank is expected to announce monthly bond purchases of $45 billion, on top of the $40 billion in mortgage-backed security purchases it announced in September.
Also underpinning gold was a lack of apparent progress in US budget talks. US President Barack Obama was scheduled to speak in Michigan on Monday afternoon. He met on Sunday with Republican House Speaker John Boehner in hopes of reaching agreement on a budget ahead of automatic tax hikes and spending cuts set to go into effect in the new year.
Analysts said safe havens such as gold and silver could sell off in the near term if a budget deal is clinched.
"Although markets are taking the lack of progress thus far with an impressive degree of complacency, we wonder when a potential breaking point will be reached," said Edward Meir, metals analyst at brokerage INTL FCStone. "As a result, we would be cautious on gold and silver here, but less so on platinum and palladium."
Spot gold rose 0.5 percent to $1,712.80 an ounce by 11:23 a.m. EST (1622 GMT), rebounding from a one-month low hit on Friday after data showed US employers hired more workers than expected in November.
US gold futures for February delivery were up $8.90 to $1,714.40, with trading volume on track to finish sharply below its 30-day average, preliminary Reuters data showed.
PAULSON & CO HAD MIXED NOVEMBER
Gold market largely ignored news that high-profile hedge fund manager John Paulson told his clients on Friday evening that his funds experienced mixed returns in November with softer gold prices weighing on some portfolios.
Late Friday's CFTC data also showed hedge fund and money managers cut their bullish bets on US gold last week to the lowest level since late August.
Among other precious metals, silver was up 0.9 percent at $33.28 an ounce. Platinum climbed 1.6 percent to $1,620.50, while palladium gained 1 percent to $699.70.
Center>Copyright Reuters, 2012
Comments
Comments are closed.