Gold holds above $1,660/oz on monetary easing talk
By Jan Harvey
LONDON (Reuters) - Gold prices steadied above $1,660 an ounce on Monday, taking a breather after four straight days of gains, as prices took support from speculation the Federal Reserve could launch a new round of monetary easing.
Spot gold was at $1,662.31 an ounce at 0942 GMT against $1,662.32 late on Friday, while U.S. gold futures for June delivery were down $1.30 an ounce at $1,663.40.
The metal retreated from early highs as the dollar firmed a touch against the euro, with the single currency hurt by caution ahead of a European Central Bank meeting and elections in France and Greece this week. It is firmly underpinned, however. <FRX/>
Softer-than-expected U.S. growth data on Friday reignited speculation that the Fed could take fresh measures to stimulate the economy by raising money supply, a move likely to undermine the dollar and keep real interest rates at rock bottom.
Non-yielding gold, which is priced in dollars, tends to benefit in such an environment.
"We had the GDP data from the United States, which (fuelled) higher hopes of quantitative easing," LGT Capital Management analyst Bayram Dincer said. "Analysts have really decreased (their expectations for QE), but I feel if the conditions are right, we can still see some sort of quantitative easing."
Gold traders are awaiting the outcome of a French debt sale later on Monday, as well as an ECB press conference and rates decision on Thursday, for clues on the outlook for the euro zone economy. U.S. payrolls data on Friday will also be a key driver.
Gold's ability to hold above $1,620 an ounce this month, despite several tests of that level, is cheering investors that the longer term bull trend is intact, analysts said. Continued...