Gold Jumps To Highest Level In Almost Six Weeks

Gold jumped to the highest level in almost six weeks early Monday, while platinum hit its highest since July as miners braced for the biggest halt since the deadly union clashes two years ago.

The bullion market enjoyed a quite positive trade last week, with price settling close to one-month high as investors weighed the prospects for further Fed stimulus cuts against increased physical demand. Moreover, holdings in SPDR Gold Trust, the world`s largest gold-backed exchange-traded fund, rose 7.49 tons to 797.05 tons on Friday, the first increase in a month.

Spot gold was up 0.11% at $1,255.49 an ounce as of 02:13 EST, after rising as high as $1,259.96 earlier in the day, but little changed from Friday`s close at $1,254.05.

Gold gained for four consecutive weeks, recouping nearly 4.1% this month after a 28% loss in 2013 that was the biggest in over three decades. However, the rally has apparently lost some steam as the dollar continues to hold gains against a six-currency basket following kindly upbeat US economic data.

In the meantime, the US stock markets are closed on Martin Luther King Day, so trading volumes are expected to ebb down throughout the day.

The Fed`s policy outlook remains the main driver of gold prices, while expectations of further stimulus cuts supporting the dollar in the wake of signs the world`s largest economy is adding momentum. Although the dollar pressure seems to be evident on the metal, yet a robust Chinese demand kept fanning the positive sentiment.

The Dollar Index (USDIX) was hovering around 81.29 as of 09:49 GMT+2, after rising as high as 81.4 from 81.33.

A report showed that deliveries by the Shanghai gold Exchange to China, the world`s top consumer, almost doubled in 2013.

Among other precious metals:

- Spot Silver -0.12% at $20.29 an ounce

- Spot Platinum +0.74% at $1,463.93

- Spot Palladium +0.11% at 748.10 an ounce

The surge in platinum prices was clearly evident with the start of the week, as mines brace for the biggest stoppage since the clash of 2012, following

Anglo American Platinum is expected to be served with strike notice after vote by members of Association of Mineworkers and Construction Union day in Rustenburg, northwest of Johannesburg. The vote is expected to bring a large portion of country`s mining sector to a halt on Thursday.

In August 2012, protests between rival unions at Marikana mine, 60 miles north-west of Johannesburg, owned by UK-based Lonmin, led to nine deaths, as several thousand miners held a strike over working conditions.

South Africa produces 85% of the world`s platinum, and a prolonged would probably put severe pressure on the profits of mining houses.