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Gold Edges Up On Weak Dollar
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The dollar hit its lowest against a basket of currencies in nearly two weeks. But the greenback, a favoured safe haven asset, was still up more than 3 per cent so far this year.
The strength in the dollar has been pressuring gold, which has risen barely 1 per cent year to date and has been especially sensitive to signals from the US Federal Reserve on its attitude towards monetary easing, which would lift inflation outlook and boost investor interest in bullion.
But Fed Chairman Ben Bernanke's non-committal comments in front of the Congress over the past two days disappointed gold investors who had hoped for prompt action from the central bank to aid the faltering economic recovery.
"Gold is rangebound between $1,550 and $1,600 an ounce for the time being, as people are waiting for the next Fed meeting for cues on QE3 (third round of quantitative easing)," said Ronald Leung, a physical dealer at Lee Cheong Gold Dealers in Hong Kong.
Leung said a slowdown in the global economy, including key gold consumer China, would likely dent gold purchases from average consumers.
Spot gold gained 0.4 per cent to $1,578.35 an ounce by 0317 GMT.
US gold futures contract for August delivery rose nearly half a per cent to $1,578.30.
US economic growth cooled in June and early July and hiring grew at a tepid pace in much of the country, but latest data showed new home starts rose in June to its fastest pace in over three years.
But overall, investors remained worried about global growth. They were willing to pay the German government to park their money in its two-year paper, for the first time ever, as the German Bund continues to attract safe haven flows.
India's gold imports fell by more than a half in the June quarter and could slide by a third in the next three months as prices inflated by a weak rupee and a 4 per cent import duty encourage traders to use scrap, a Reuters poll showed.
Other precious metals also rebounded. Spot silver rose 0.5 per cent to $27.28 an ounce, on course for its biggest one-day rise in more than a week.
Silver has been wallowing near $27 an ounce since earlier this month, and the relatively low prices have attracted buying interest in the physical market, said a Shanghai-based trader. Spot silver rose to this year's high above $37 in February.
"Since prices are low we do see an uptick in buying interest, but miners aren't willing to sell," he said, adding that supply in Hong Kong and Japan is also slightly tight.