Arab Today, arab today gold rises on optimism over fed greek debt
Last Updated : GMT 12:18:19
Arab Today, arab today
Arab Today, arab today

Gold rises on optimism over Fed, Greek debt

Arab Today, arab today

Arab Today, arab today Gold rises on optimism over Fed, Greek debt

New York - Arabstoday

Gold prices rose on Wednesday, snapping a three-day losing streak, as hopes for a new US asset-purchase programme and better prospects facing Greece\'s debt deal boosted risk appetite. Gold followed increases in US equities and crude oil after major banks and pension funds threw their weight behind Greece\'s bond swap offer to private creditors, making it increasingly likely that the rescue package will go through. Bullion extended gains after the Wall Street Journal said US Federal Reserve officials were considering a new type of bond-buying program designed to subdue inflation worries. Despite the rise, the metal has lost 6 percent since Wednesday last week, partly due to fears that no monetary easing was imminent. \"The Fed is going to be so busy managing the yield curve and it will forget to conduct sound monetary policy and to mop up this liquidity at some point,\" said Axel Merk, portfolio manager of Merk Funds with US$700m in assets under management. Merk said the possibility of a US asset-purchase program boosted gold\'s inflation-hedge appeal. Moves by the Fed to boost economic growth have eroded its credibility to carry out mandates as a central bank, he said. Spot gold was up 0.6 percent at US$1,684.76 an ounce by 3:35 p.m. EST (2035 GMT). US gold futures for April delivery settled up US$11.80 an ounce at US$1,683.90, with trading volume sharply lower than the previous day and about 20 percent below its 30-day average, preliminary Reuters data showed. Gold tumbled 2 percent in heavy trade on Tuesday, breaching key support at its 200-day moving average, on fears of a chaotic Greek default. A group of banks and funds representing about 40 percent of Greece\'s €206bn (US$270bn) of outstanding debt on Wednesday said they would take part in the deal, joining others that have pledged to accept the offer. \"Gold is up because there is growing evidence that there will not be a hard default in Greece,\" said Bill O\'Neill, partner at commodities investment firm LOGIC Advisors. Despite Tuesday\'s sell-off, open interest in US gold futures lost only 0.2 percent, CME data showed, suggesting some investors could have added new short positions when gold broke below its 200-DMA. Bullion, which has recently followed riskier assets instead of trading as a safe haven, also drew support after data showed U.S. companies increased their hiring in February. The price drop elicited a response from the consumer sector, where buying in China and India has picked up this week, albeit modestly, and holdings of metal in exchange-traded products remain at record highs, reflecting investor demand for gold. \"Although the macro environment is still very gold-supportive, in the nearer term it\'s going to be the physical market and whether that enables prices to consolidate enough so that investment demand can retake the reins,\" Barclays Capital analyst Suki Cooper said. Among other precious metals, silver gained 1.6 percent at US$33.43 an ounce. On Tuesday, it dropped more than 4 percent. Platinum group metals also rebounded after the previous session\'s sharp losses. Platinum added 1.1 percent at US$1,626.99 an ounce and palladium rose 3.1 percent to US$684 an ounce. Impala Platinum\'s Rustenburg mine, hit by a large-scale strike earlier this year, was unaffected by a one-day work stoppage in the world\'s No. 1 platinum producer, South Africa.

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