Thursday, February 21, 2013

Gold up as data boosts Fed stimulus after drop


Gold rose nearly 1 percent on Thursday as lackluster U.S. economic data boosted hopes that the Federal Reserve will maintain its monetary stimulus, allaying fears that the U.S. central bank may stop buying assets soon.

Thursday's economic reports from claims for jobless aid to factory activity and consumer prices pointed to a still tepid recovery, supporting the argument that the Fed should continue its buying of $85 million in bonds per month to stimulate growth.

An increasingly divided Fed on whether it should halt its stimulus program, evidenced by the minutes of the Fed Open Market Committee (FOMC) meeting in January, weighed heavily on gold's inflation-hedge appeal.

Signs of an improving U.S. economy have diminished gold's traditional status as a safe haven against economic uncertainty. The price of gold has dropped almost 10 percent from a high above $1,700 an ounce in early December.

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