Gold rally comes to a halt

SINGAPORE. – Gold looked set to snap a three-day winning streak yesterday, but prices held near
US$1 300 an ounce on hope the US Federal Reserve would stick to its easy monetary policy, burnishing the metal’s appeal as a hedge against inflation.
Spot gold had eased 0,2 percent to US$1 287,11 an ounce early yesterday morning. Prices rose nearly 2 percent in the previous three sessions, underpinned by expectations that the nominee to lead the Fed, Janet Yellen, would continue the bank’s US$85 billion in monthly bond purchases in that role.

“I think markets have already priced in Yellen’s nomination and the tapering being pushed to next year,” Globlex Holding Management MD Songwut Apirakkhit said in Bangkok.

“As long as prices are still below US$1 300, we think gold is in a bear market. We will change our view to neutral if the price goes above that level.”

Bullion has lost nearly 25 percent of its value so far this year on fears the gold-friendly bond purchases would be cut back as the US economy improves.

Last week Ms Yellen – who if confirmed by the Senate will take over from Fed chairman Ben Bernanke at the end of January – made plain she would press

forward with the central bank’s ultra-easy monetary policy until officials were confident a durable economic recovery was in place that could sustain job creation.
But price gains after those comments have lost some momentum as charts show the metal is seeing resistance around US$1 290 an ounce.
“Technically, the gold price is likely to meet strong resistance once at US$1 295 and . . . at US$1 300,” Phillip Futures said in a note. – Reuters.