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News // Metal market

Gold Steady, After Geithner Comment

19 October 2010 , 08:29Reuters2226

The dollar rose nearly half a percent against a basket of currencies, extending gains made

in the previous session after Treasury Secretary Tim Geithner said the United States would
not engage in dollar devaluation.

"Gold is likely to continue the rally before the Federal Reserve meeting in early November.

Unless the Fed announces quantitative easing to a huge extent, gold will retrace," said
Zhu Yilin, general manager of the research and development department of Jingyi Futures

in Shanghai.

"It's all about buying the anticipation. Once the result is out, it's time to close positions."

U.S. industrial output shrank last month for the first time in more than a year, a sign

the economy was in a slow-growth rut that appears certain to lead to more stimulus from

the central bank.

Spot gold XAU= was little changed at $1,368.95 an ounce by 0324 GMT, after moving in a

tight range of less than $2 in the previous session.

U.S. gold futures for December delivery GCZ0 fell 0.2 percent to $1,369.6.

Technical analysis showed that gold could rise to $1,386.75, as the retracement is seen

to have ended at $1,352.55, a low touched on Monday, according to Reuters market
analyst Wang Tao.

"The support level is at $1,350. Gold is likely to trade around the current level, until we

know how much the stimulus is going to be," said a Hong Kong-based dealer.

He added that premiums were little changed from last week, at about 70 cents above

London prices.

"Demand from China is steady, as people still like to buy gold, betting on prices to rise

to $1,400, $1,500 and even $1,600. The yuan appreciation also helps buying from China."

China has allowed its currency to rise more swiftly in recent weeks after depegging it from

the dollar in June, but a central bank spokesman said the country must ensure the yuan
moves in a controllable manner and not become over-adjusted in response to market forces.

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