Gold edges towards $1,400

[] — GOLD hit another record around $1,394 an ounce on Friday before speculators cashed in, but a falling dollar blamed on the US Federal Reserve’s unpopular decision to buy more government bonds could still spur buying.

Investors awaited the release of monthly US jobs report, which may show anemic jobs growth in October. The Fed’s move was a little more than expected, but not enough to spook markets with worries about a worse-than-anticipated US economic picture.

Gold fell $4.14 to $1,388.11 an ounce later in the morning, having risen as high as $1,394.06 in early trade. Bullion, which posted its biggest one-day rise since early 2009 on Thursday, has gained as much as 27% this year.

“Once we’ve got the market doing what it wants to do, you’ve got to run with it. You’ve got to continue to be with it,” said Jonathan Barratt, managing director at Commodity Broking Services in Melbourne.

“I think the market really wants to ring the bell. I think the market is going to say, well, let’s look at $1,400.”

Policymakers from the world’s new economic powerhouses in Asia criticised the Fed’s move to inject billions of dollars into the US economy, saying it made any substantive deal on cutting global economic imbalances less likely at next week’s Group of 20 meeting in Seoul.

The dollar struggled near fresh lows ahead of US payrolls data on Friday after breaking down to a new 2010 trough against a basket of currencies. Economists in a Reuters poll forecast 60,000 jobs were created in October after 95,000 were lost in September.

US gold futures for December delivery rose $5.4 an ounce to $1,388.5 an ounce. Silver hit a 30-year high to catch up with gold prices, while palladium rose to a fresh 9-year high.

Gains in palladium was driven by firmer gold and equities and not by purchases from the industrial sector, said dealers. Palladium and its sister metal platinum are mainly used in auto catalysts to clean exhaust fumes.

“Unfortunately, the industrial sector is very quiet. Last week, we could see some demand for palladium from the auto and electronics sectors, but the price has since gone up,” said a physical dealer in Tokyo.

Premiums for gold bars in Hong Kong were steady at as high as $1 an ounce to spot London prices, with no signs of a pick-up in sales of gold scrap. Gold markets are closed in Singapore and India for Diwali, the Hindu festival of lights.

“There’s a bit of selling from speculators after prices reach a high. Premiums are more or less the same because there’s no scrap sold back at this stage,” said a dealer in Hong Kong.

“Let’s see if we can break $1,400 next week.”

The Nikkei average jumped 2.9% on Friday and booked its best week in a year, after the Fed’s plans to buy more Treasuries prompted investors to seek risk elsewhere, prompting rallies in global stocks and commodities.

Markets concluded the Fed’s move to increase the supply of dollars would likely weigh on the currency further. But it also benefits dollar-priced commodities, as it cuts their cost for holders of other currencies.