Gold ekes out small gain

Published: 07:56:28 AM, Mon 04 March 2013 UTC

Gold futures have eked out a gain for the first time in four sessions after a pair of top Federal Reserve officials underlined their support for the central bank's easy-money policies.

The most-actively traded contract, for April delivery, on Monday rose 10 US cents to settle at $US1,572.40 a troy ounce on the Comex division of the New York Mercantile Exchange.

In testimony before congress and a speech last week, Fed Chairman Ben Bernanke reiterated his support for the central bank's $US85 billion ($A83.74 billion)-a-month easing program.

On Monday, Fed Vice Chairman Janet Yellen said the benefits of the program outweighed its risks.

Worries that the Federal Reserve would pull the plug on its stimulus effort curbed investor appetite for gold so far this year as a hedge against the inflation that can follow such measures.

Minutes from the central bank's two most-recent policymaking meetings show a debate about when to withdraw the Fed's current bond-buying program.

Gold had closed on Friday at a seven-month low, and down about six per cent in 2013.

Gold is in "a little bit of a recovery bounce" on Monday, said Adam Klopfenstein, a senior market strategist with Archer Financial Services.

Gold held modest gains in low volume for most of the trading session on Monday, mirroring muted moves in currencies and US equities.

Analysts and traders said gold could draw some buyers in the days ahead as US budget cuts take effect following the failure of the White House and Congress to come up with an alternative to the so-called sequester cuts.

The cuts "will certainly worry the broader market and could limit the downside in gold," VTB Capital analyst Andrey Kryuchenkov said in a note.

Some investors buy gold on the belief that it will perform better than other assets during market turmoil.

Gold demand has been muted this year as signs of stabilising economic growth pushed US stock markets to multi-year highs and limited demand for safe-haven assets.

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