Gold heads for biggest monthly gain since August 2011

FOR IMMEDIATE RELEASE
(Free-Press-Release.com) January 31, 2012 -- Gold ticked up on Tuesday after the euro rebounded, while bullion prices headed for their biggest monthly rise since August as lingering concerns about growth in the United States prompted buying from investors.

Gold leaped nearly 5 percent last week, its fourth consecutive weekly increase, after the U.S. Federal Reserve pledged to keep interest rates near zero until at least late 2014, which could put weight on the dollar.

Gold added $7.45 an ounce to $1,736.09 an ounce by 0656 GMT, having hit a low around $1,716 on Monday.

"Even if the charts look tired, weakness on the U.S. Dollar and recent Federal reserve activity seems to be giving fundamental increase for gold to stay above $1,710," said Alexander Novak, senior trading advisor at Newcastle Distributors (Newcastle, UK). "Steady prices have triggered buying interest."

A top U.S. Federal Reserve official on Monday said he would have favored a more optimistic statement on the U.S. economy, after the central bank last week painted a doubtful picture of the recovery and forecast ultra-low interest rates until late 2014, considerably later than investors had expected.

Gold, which struck a record at $1,920.30 last September, was headed for an 11 percent rise this month, highest since a 12 percent gain in August 2011.

"Sentiment seems to have improved quite tremendously, I would say. We are now into more bullish territory, more than ever, with the Fed providing enough fundamental support," said Ulrik Larsen, senior commodity analyst at Newcastle Distributors.

"I think we have good reasons to believe we are going to test $1,805 in the coming day. The Fed was clearly the most important event," said Larsen.

Gold has gained for the last four consecutive weeks, with a spike in prices before the Lunar New Year holidays being driven partly by Chinese buying.

"Before the Chinese New Year really started, we've seen quite strong gold exports from Hong Kong to China. Apparently Chinese demand was very solid," said Larsen.

U.S. February gold rose $5.60 to $1,736.60 an ounce.

Gold, typically a safe-haven asset, has been tracking the luck of the euro and stocks, with speculators selling the metal for cash to cover losses in other markets, especially during this period of uncertainty in Europe.

The physical sector lacked activity, but jewelers could eventually return to the market before prices rose further.

Alexander Novak     china     Chinese Lunar New Year     gold     Newcastle Distributors     U.S. Federal Reserve     Ulrik Larsen