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Gold futures edge higher on reports of central bank buying

Published 05/27/2013, 03:42 AM
Updated 05/27/2013, 03:42 AM
Investing.com - Gold futures edged higher in holiday-thinned trade on Monday, as reports of central bank buying benefitted sentiment.

Comex floor trading will be closed on Monday in observance of the U.S. Memorial Day, while the London Metal Exchange will be closed for a bank holiday.

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at USD1,393.55 a troy ounce during European morning hours, up 0.45% on the day.

Comex gold prices held in between a tight USD10-range between USD1,384.04 a troy ounce, the daily low and a session high of USD1,394.25 a troy ounce.

Gold futures were likely to find support at USD1,337.85 a troy ounce, the low from May 20 and resistance at USD1,413.05, the high from May 22.

Gold prices were supported after data from the International Monetary Fund showed that Russia and Kazakhstan added to their gold reserves for a seventh straight month in April.

Russian holdings rose 8.4 metric tons to 990 tons, while Kazakhstan’s central bank purchased 2.6 tons to take its total holdings to 125.5 tons.

Comex gold fell to a 27-month low of USD1,322.25 an ounce on April 16. Prices of the precious metal are still down almost 27% since hitting an all-time high of USD1,920.80 an ounce in September 2011, sparking fears that gold’s bull run is coming to an end.

Meanwhile, investors continued to speculate over the need for further stimulus in the U.S.

Gold prices have been under heavy selling pressure in recent months amid expectations the Federal Reserve will wind down its stimulus program, citing indications of an improving U.S. economic outlook.

Fed Chairman Ben Bernanke said last week a decision to scale back the central bank’s USD85 billion-dollar-a-month asset purchase program could be taken in the "next few meetings" depending on economic data.

Moves in the gold price this year have largely tracked shifting expectations as to whether the Federal Reserve would end its bond-buying program sooner-than-expected.

Elsewhere on the Comex, silver for July delivery rose 0.65% to trade at USD22.64 a troy ounce, while copper for July delivery eased up 0.3% to trade at USD3.306 a pound.

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