SINGAPORE: Gold rose above $1,660 an ounce for the first time since early May on Thursday, after minutes from the latest US Federal Reserve meeting fuelled hopes for the swift launch of another round of quantitative easing.
The precious metal had traded in a $100 range since May, with investors awaiting clarity on the Fed's policy on further monetary easing.
Economic stimulus is expected to raise the inflation outlook, benefiting gold, which is seen as a hedge against rising prices.
The Fed is likely to deliver another round of monetary stimulus "fairly soon" unless the economy improves considerably, minutes from the central bank's latest meeting suggested.
"The Fed's tone is totally different in the minutes from previous comments, and that helped gold break from the previous range and move into a higher price range ahead of the peak consumption season," said Chen Min, an analyst at Jinrui Futures in the southern Chinese city of Shenzhen.
Spot gold climbed to $1,662.01 an ounce, its highest since May 2, before easing slightly to $1,661.86. Prices broke above the key 200-day moving average in the previous session for the first time in nearly five months.
The US gold futures contract for December delivery gained 1.5 percent to $1,664.60.
Reuters market analyst Wang Tao said charts indicated spot gold could rise to resistance at $1,664 before retracing to $1,647.
Short-covering and the strength in the euro also helped demand for gold, keeping it on course for its seventh session of gains.
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Investors are eyeing meetings between Greek Prime Minister Antonis Samaras and other European leaders as Athens seeks more time to meet its bailout commitments, while China's central bank chief said Beijing must use all available tools to manage monetary policy effectively.
Investors have shown more interest in gold on rising speculation of further monetary stimulus globally. Holdings of the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, continued to rise, hitting a three-month high of 1,281.978 tonnes by Aug. 22.
The jump in gold prices excited physical gold traders in Asia, who expected flows of scrap.
"We'll definitely see scrap flow coming in later. It's just a question of how much," said a Singapore-based dealer.
But scrap selling was muted in Tokyo as a strong yen makes local gold prices less attractive for sellers, dealers said.
Other precious metals hovered near multi-month highs hit in the previous session.
All precious metals appeared to be in overbought territory, with their Relative Strength Index readings exceeding 70.
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