Gold Below $960 and Could Ease Further

Spot gold was trading at $957.55 an ounce around 06:33 GMT, down 0.5 percent from New York's notional close on Tuesday.

"We saw some bargain hunting at the lower level at the open," said Peter Tse, a dealer at Scotia Mocatta in Hong Kong.

He said although prospects for a further rise in gold continued to look bright, he would not be surprised if it dipped to a low of about $940 in the near term.

A dealer based in Hong Kong agreed that gold could ease in the short term.

On Tuesday, gold's failure to revisit last week's high above $1,000 triggered a bout of profit taking by short-term investors.

Gold's losses accelerated after Federal Reserve Chairman Ben Bernanke said inflation pressures had receded dramatically as oil and commodity prices had fallen and slack had built up in the economy, denting gold's appeal as an inflation hedge.

Bullion was also pressured after U.S. stocks rallied 4 percent following Bernanke's comments that signaled that the nationalization of major banks was not at hand, showing that investors were shifting funds into riskier assets.

Gold showed little reaction to U.S. President Barack Obama's speech, his first to a joint session of Congress, in which he tried to strike a delicate balance between hope and reality.

Indicating that investor interest may have paused for the time being, holdings of SPDR, the world's largest gold-backed exchange traded fund, remained unchanged at a record high 1,028.98 tonnes on February 24, a level it first touched on February 19.

Source: Reuters

Author: Ksenia Kochneva