Gold, little changed in Asian trade, was poised for a fourth straight week of gains on speculation that the dollar may decline ahead of an expected reduction in US interest rates next month.
The Federal Reserve meets on Dec. 16 with the world’s largest economy in recession. The dollar index in New York, which measures the currency against those of six trading partners, has dropped this week for the first time in four weeks, declining 2.9% to 85.631.
“As a safe-haven asset, investors have chosen to retain their exposure to gold as a physical asset rather than maintain paper exposure,” Barclays Capital said yesterday in a report. “This could provide a firmer base for gold to build price gains from, particularly if we see a continuation of the weaker dollar.”
Gold for immediate delivery was little changed at $US814.22 an ounce at 9:57 a.m. in Singapore, gaining 1.7% this week. Silver for immediate delivery, 0.3% lower at $US10.33 an ounce, has gained 6.8% this week.
The Fed may cut key lending rates to 0.75% from 1% to bolster growth, according to the median of 69 estimates in a Bloomberg survey.
China lowered its key lending rate effective yesterday less than three weeks after unveiling a 4 trillion yuan ($US586 billion) stimulus plan to revive economic growth. The key one- year lending rate dropped 108 basis points to 5.58%.
Gold demand in China rose 18% in the third quarter of this year, the World Gold Council said Nov. 19. Demand increased 29% in India and 15% in the Middle East.
Gold for February delivery climbed 0.5% to $US815.60 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange at 9:58 a.m. in Singapore.
