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BW Businessworld

Gold Hovers Near 2-1/2 Week High

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Gold held near a 2-1/2 week high on 6 January supported by weaker equities, but a stronger dollar and bullish comments from Federal Reserve Chairman Ben Bernanke on the US economy kept gains in check.

Fundamentals

* Spot gold had eased 0.1 per cent to $1,234.90 an ounce by 0021 GMT, not far from a 2-1/2 week peak of $1,240. It lost nearly 30 percent of its value last year.

* Bernanke, who steps down as head of the Fed at the end of the month, gave an upbeat assessment of the US economy in coming quarters, though he did temper the good news in housing, finance and fiscal policies by repeating that the overall recovery "clearly remains incomplete".

* In what could possibly be his last speech as Fed chairman, Bernanke also said the US central bank is no less committed to highly accommodative policy now that it has trimmed its bond-buying stimulus.

* Markets are looking towards a slew of data releases this week, including U.S. nonfarm payrolls and trade numbers, to gauge the strength of the economic recovery and how aggressive the Fed could get with its stimulus tapering.

* Gold price premiums in India, one of the top buyers of the metal, fell due to lack of demand even as supplies trickled in from a few importers. Traders quoted a premium of $105 an ounce on London prices, down 12.5 percent from last week.

(Reuters)