PRECIOUS-Gold bounces on stronger euro; focus on Fed testimony

by Clara Denina,  |  published on February 28, 2013

Gold rose on Monday, as rallying stock markets and a broadly lower dollar helped the metal recoup some of last week’s losses, but investors were cautious ahead of Fed Chairman Ben Bernanke’s testimony to Congress later this week.

Analysts said the market was also finding background support from a downgrade of Britain’s credit rating by Moody’s and signs that Japan would continue with ultra easy monetary policy.

Spot gold rose 0.7 percent to $1,592 by 1121 GMT. It hit a seven-month low of $1,554.49 on Thursday after minutes from the U.S. Federal Reserve’s last meeting triggered worries the central bank might wind down its bond buying programme.

U.S. gold futures for April delivery rose 1.2 percent to a session high of $1,592 an ounce. It was last seen at $1,591.50, still up 1.1 percent.

“With supportive news over the weekend, we can argue that we have removed quite a lot of overhangs seen in gold recently but we need to see a move above $1,600 and even $1,625 before we start talking about a recovery,” Saxo Bank head of commodity strategy Ole Hansen said.

Moody’s slashed the UK’s AAA rating by one notch, raising prospects of continued loose monetary and fiscal policy, while Japan is likely to nominate a proponent of aggressive monetary easing as its next central bank governor.

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