[miningmx.com] — Spot gold edged higher on Monday to near its record, and market sentiment stayed buoyant on speculation of more quantitative easing in the United States as investors worry about the economic recovery.
Weak data out of the US on Friday helped push gold to a new all-time high.
Underlying US inflation pressures were muted in August and consumer morale hit a 13-month low this month, keeping alive fears of deflation and spurring bets on further monetary easing.
“For today at least, the market will continue to speculate on more quantitative easing ahead of the Federal Reserve meeting on Tuesday, which should provide some support to gold,” said Ong Yi Ling, an analyst at Philip Futures.
To fuel more economic uncertainties, a range of European data on manufacturing, consumer confidence and Germany’s business climate is expected to add to evidence of a slowdown in recovery.
The market will also be watching for any comment from European Central Bank policymakers about the economic outlook.
Spot gold edged up 0.4 percent to $1 281.15 an ounce by 06.24 GMT, just below the all-time high of $1 282.75 hit on Friday.
US gold futures for December delivery rose 0.4 percent to $1 283.1 an ounce.
Spot gold may retrace to $1 265 per ounce as a small five-wave cycle is seen over the Friday high of $1 282.75, according to Wang Tao, a Reuters market analyst.
Holdings in the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust rose 6.079 tonnes to 1 300.825 tonnes by Sept 17, the highest since the beginning of the month.
On the physical market, demand is expected to stay strong in the next few months, especially out of China, dealers said.
“We expect more physical demand from India and China. The year-end holiday season should be good for the physical market,” said Peter Fung, head of dealing at Wing Fung Precious Metals.
“The jewellery demand from China should be good from now through the year-end.”
Spot silver rose 0.6 percent to $20.89 an ounce, after reaching $20.99 on Friday, its highest in the past two-and-a-half years, with the March 2008 peak of $21.24 in sight.
“We see increasing uncertainties in the market, because silver has rallied so much,” said Ong of Philip Futures.
“If the rally loses steam, we can see possibly a steep correction for silver. That will be the downside risk.” The support level would be at $20.50 in the short term, she added.
The Relative Strength Index, or RSI, rose to a one-year high of 78.059, showing the market was already overbought.
The world’s largest silver-backed exchange-traded fund, the iShares Silver Trust, said its holdings rose to 9,381.74 tonnes by Sept 17 from 9,343.69 tonnes on Sept 16.
