The price of spot gold increased on Monday to near its record, raising speculation of more quantitative easing in the USA as investors remain concerned about the economic recovery.
Gold was pushed to an all-time high on Friday following weak data. Consumer morale dropped to its lowest in 13 months in August while underlying inflation pressures have kept fears of deflation in mind and have encouraged speculation on further monetary easing.
“For today at least, the market will continue to speculate on more quantitative easing, which should provide some support to gold,” said Ong Yi Ling, an analyst at Philip Futures.
An array of European data concerning manufacturing, consumer confidence and Germany’s business climate is expected to add further evidence of a slowdown in recovery which will add even more fuel to speculation on economic uncertainty.
Spot gold edged up 0.4 percent to $1,281.15 an ounce by 0624 GMT,
Friday’s all-time high figure of $1,282.75 was almost matched by the US gold futures for December, up 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 (GLD.P) were at its highest since the beginning of the month, rising by 6.079 tons to 1,300.825 tons by 17 September.
“We expect more physical demand from India and China,” said Peter Fung, head of dealing at Wing Fung Precious Metals. “The year-end holiday season should be good for the physical market”.
Spot silver climbed 0.6 percent to $20.89 an ounce, after hitting $20.99 on Friday, its highest in the past two-and-a-half years and chasing the the March 2008 peak of $21.24.
