Metals - Gold edges higher on bargain hunting UPDATE

Metals - Gold edges higher on bargain hunting UPDATE

	Published : Thu, 28 Jun 2007 12:13 By : Agencies Print this Story

(Updates prices, adds details)

LONDON (Thomson Financial) - Gold edged higher as bargain hunters helped the precious metal recover from a three-month low hit the previous day.

'Gold has edged above 645 usd this morning as traders continue to view sub-650 usd as a good buying area,' said TheBullionDesk.com analyst James Moore.

At 11.48 am in London, spot gold was trading at 645.50 usd per ounce against 642.10 usd in late New York trade yesterday. Gold has lost 4 pct since the start of the month.

Gold fell steeply yesterday after coming under pressure from falling equity stocks, as investors looked to cover losses in other markets by selling the precious metal.

It recovered slightly on higher oil prices and early bargain hunters.

'The rising crude oil prices provided some support for gold,' said Dresdner Kleinwort analyst Peter Fertig.

Gold tends to rise in line with higher energy prices, as investors look to hedge against inflation.

Market players are waiting for clues to the direction of the US economy from the meeting of the Federal Open Markets Committee (FOMC) later today, which could move the dollar and in turn, gold.

Gold tends to move in the opposite direction to the US currency as it is seen as an alternative asset.

US interest rates are expected to remein unchanged at 5.25 pct, but comments on the strength of the US housing market and inflation are expected to weigh heavily on the dollar today.

'The major event for gold today is the FOMC meeting in the US. It is widely expected that the Fed Funds rate will be kept unchanged,' said Fertig at Dresdner Kleinwort.

'The focus will be on the statement issued after the meeting. The assessment of the FOMC concerning the risks for growth and inflation could move markets including gold,' he added.

The FOMC meeting ends at 8.00 pm London time, with the statement due for release shortly afterwards.

Analysts predict a day of light trade ahead of the FOMC statement from Fed Chairman Ben Bernanke.

'With the FOMC statement and decision due after the Comex market closes tonight, we suspect that trade will be relatively quiet today as dealers wait nervously for Dr Bernankes pronouncements,' noted UBS analyst, Robin Bhar.

In other precious metals, silver was up at 12.40 usd per ounce against 12.20 usd, palladium was down at 360 usd per ounce against 363 usd while platinum was up to 1,272 usd per ounce from 1,268 usd in late New York trades yesterday.

d.sheppard@thomson.com

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