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Gold shines as markets await easing

By Michael Bellart (Global Times)

08:50, August 27, 2012

With few domestic data releases scheduled for early this week, Chinese metals futures are likely to continue to search for direction as global financial markets continue to play the guessing game over whether the US central bank will launch another round of monetary stimulus.

The benchmark three-month copper contract on the London Metal Exchange (LME) was steady Friday, finished the day up 0.2 percent at $7,662.80 per ton. The contract added 1.6 percent last week.

Meanwhile, the most traded Comex gold contract ended the day just north of even at $1,672.90 per ounce. The contract finished the week up 3.3 percent as the anticipation grew, though in fits and starts, about monetary stimulus.

Gold performed better as the heightened expectations of stimulus increased its attractiveness as a hedge against the devaluation of the US dollar.

The anticipation jerked commodities prices higher on some days and lower on others, depending on which official's words dominated the news cycle.

On Thursday, St Louis Fed President James Bullard downplayed the possibility, causing copper futures to slide and holding down gold prices. After the Chinese mainland markets closed Friday, the markets reversed course after Chairman Ben Bernanke said in a letter to a congressional panel that there is room for the Fed to take on more stimulus to buoy the US economy, Reuters reported.

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