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Gold extends gains as Yellen calms stimulus tapering fears

Published: 14th November 2013 09:56 AM  |   Last Updated: 14th November 2013 09:56 AM   |  A+A-

 

* Gold up for second session but still below $1,300

* Yellen says Fed has 'more work to do' to aid U.S. recovery

* SPDR holdings dip for the first time nearly 2 weeks

Ananthalakshmi | Reuters

SINGAPORE: Gold extended gains into a second session on Thursday after Janet Yellen, likely the next chair of the Federal Reserve, indicated the U.S. central bank would continue to support the economy through its stimulus measures.

Prices had fallen sharply in the four sessions through Tuesday after strong U.S. economic and jobs growth data raised fears the Fed could begin tapering its stimulus in December.

However, in remarks prepared for delivery to the Senate Banking Committee on Thursday, Yellen - President Barack Obama's nominee to lead the Fed - said the economy and the labour market were performing "far short" of their potential.

"Based on what Yellen has mentioned, it doesn't look like the tapering will happen soon until the economy has stabilised," said Brian Lan, managing director of Singapore-based dealer GoldSilver Central Pte Ltd.

"The dollar has come down a little so that's also supporting prices."

Spot gold rose 0.4 percent to $1,283.76 an ounce by 0312 GMT, after snapping a four-day losing streak on Wednesday with a gain of nearly 1 percent.

U.S. gold advanced as much as 1.4 percent, tracking spot gold. The dollar index was near one-week lows. Other precious metals also climbed.

The Fed's $85-billion monthly bond purchases have been a key support for gold prices in recent years as they burnish the metal's appeal as a hedge against inflation.

Fears that an improving economy could prompt the Fed to begin rolling back on stimulus measures soon have pushed gold prices down nearly 25 percent this year.

Physical demand has picked up as gold trades below $1,300 an ounce but has not been strong enough to give prices an upside.

Outflows from SPDR Gold Trust, the world's biggest gold-backed exchange-traded fund, resumed after pausing two weeks ago.

Holdings in the fund fell 2.71 tonnes to a fresh four-year low of 865.71 tonnes on Wednesday. They had remained largely unchanged for most of November on uncertainty over the stimulus.

PRICES AT 0312 GMT

 Metal                          Last                 Change            Pct chg            YTD pct chg

Spot gold                      1283.76              5.15               0.4                   -23.34

 Spot silver                       20.77              0.19               0.92                  -31.41

 Spot platinum              1439.99              9.25               0.65                  -6.19

 Spot palladium              735.06              5.09               0.7                     6.22

 Comex gold Dec3       1283.3              14.9                 1.17                 -23.42

 Comex silver Dec3         20.76              0.31                1.56                 -31.51

 Euro                                 1.3469                                 

 DXY                                80.92                                 

COMEX gold and silver contracts show the most active months  



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