Gold at seven-month highs after Fed rate vow
By Amanda Cooper
LONDON (Reuters) - Gold held around seven-month highs on Monday, after a fourth consecutive weekly gain last week following the Federal Reserve's pledge to keep interest rates low which undermined the dollar and encouraged investor appetite for bullion.
The dollar fell against the euro after a measure of U.S. regional manufacturing for early September missed expectations, which offered the gold price additional support.
Spot gold was steady on the day at $1,770.40 an ounce by 10:27 a.m. EDT (1427 GMT), having risen by nearly 2 percent last week in the longest stretch of weekly gains in more than a year.
The Fed said last week it would keep U.S. rates near zero until the middle of 2015, building on its existing vow to maintain them at this level until late 2014, triggering a 2-percent rise in the gold price in one day.
The central bank also committed to $40 billion in monthly purchases of mortgage-backed securities as long as job growth was sluggish to keep borrowing rates low for homebuyers and keep credit flowing through the financial system.
"The market has to consolidate the gains it has made since the end of August. That has been already a significant move upwards for the various precious metals, so if we do not see $1,800 (in gold) this week, that would not be a problem as, nevertheless, the signs are that precious metals prices are moving higher," Peter Fertig, a consultant for Quantitative Commodity Research, said.
The Fed has already spent nearly $3 trillion on combinations of Treasury and MBS purchases in the last four years.
In this time, the gold price has doubled in value as private buyers and central banks alike have sought alternatives to the U.S. dollar in which to invest. Continued...