London 17/09/2012 - Precious metals held steady near multi-month highs on Monday afternoon, consolidating the sharp gains that were triggered by the US Federal Reserve's announcement of a third round of quantitative easing (QE3) last week.
Spot gold peaked at a six-and-a-half month high of $1,777.95 on Friday and it was still near this level at $1,770.25 late on Monday afternoon, down just 65 cents on Friday's close. It has traded in a narrow range of around $10 today.
"Precious metals are for the most part defending the gains they have made in recent days," Commerzbank said in a note.
The complex rallied sharply at the end of last week after the Federal Open Market Committee (FOMC) announced further loosening of monetary policy to reinvigorate the faltering domestic economy, making it the third major central bank, after the People's Bank of China and the European Central Bank, to do so in a week.
The Fed said it will inject $40 billion into the economy each month until there was an "ongoing, sustained improvement in the job market".
It will also continue the 'Operation Twist' programme - which extends the maturity of securities - and said it anticipates low interest rates through to mid-2015, lengthening its forecast from 2014 previously.
"Support remained in place across commodity markets," Standard Bank's Marc Ground said, adding that buying on dips, especially in gold and silver, remains a viable strategy. He expects upward price momentum among precious metals from the Fed’s commitment to remain in place over the medium term.
Given the Fed's actions, recent falls in the dollar come as little surprise. The euro was last at 1.3147 against the US currency, up 0.0017, while the dollar index dipped by 0.01 to 78.81. In commodities, oil dipped 44 cents to $116.20 per barrel
The week ahead is fairly data heavy, with Wednesday seeing the number of new building permits and existing home sales in the US and Thursday the HSBC Flash Manufacturing PMI for China, as well as the Philly Fed manufacturing index.
PGMS LOWER, ANGLO AMERICAN PLATINUM RE-OPENS MINES
News that the world's largest platinum producer, Anglo American, has recalled workers and is preparing to restart production following a blockade and protest outside its mines last week has sent platinum group metals (PGMs) prices lower.
Platinum was last at $1,689.70/1,699.70 per ounce, down $11.20 or about half a percent, while palladium drifted 40 cents to $691.50/697.50. Silver was last at $34.48/34.53, down 13 cents.
Lonmin, the company worst affected by the violent wildcat strikes, said today that it has reiterated its latest, undisclosed wage offer to employees.
The company lowered its full-year production forecast from 750,000 saleable platinum ounces to between 700,000 and 685,000 ounces for the year ending September 30, warning that unit costs will rise by more than 8.5 percent.
(Editing by Mark Shaw)