Gold inches up as Fed stimulus hopes support

SINGAPORE, Aug 27 (Reuters) – Gold inched up on Monday, hovering near a 4-1/2-month high hit last week, as expectations for further monetary easing from the U.S. Federal Reserve kept sentiment buoyant.

FUNDAMENTALS

* Spot gold edged up 0.3 percent to $1,673.99 an ounce by 0045 GMT, after posting a 3.4-percent rise last week.

* U.S. gold also gained 0.3 percent to $1,677.10.

* The Federal Reserve has room to deliver additional monetary stimulus to boost the U.S. economy, Fed Chairman Ben Bernanke told a Congressional oversight panel in a letter, supporting sentiment in the gold market.

* The European Central Bank is considering setting yield band targets under a new bond-buying programme to allow it to keep its strategy shielded and avoid speculators trying to cash in, central bank sources told Reuters on Friday.

* Meanwhile, German Chancellor Angela Merkel tried to calm a growing storm over euro zone crisis strategy on Sunday after the Bundesbank likened ECB bond-buying plans to a dangerous drug and a conservative ally of the German leader said Greece should leave the currency bloc by next year.

* U.S. businesses cut back on their spending plans for a second straight month in July, suggesting slower growth ahead for the factory sector.

* Gold imports in India, one of the world’s top gold consumers, are likely to fall this year as high local prices curb buying interest.

MARKET NEWS

* U.S. stocks climbed on Friday on news the European Central Bank is considering setting targets in a new bond-buying program that could help contain euro-zone borrowing costs and on hopes of more stimulus from the Federal Reserve.

* The euro got off to a steadier start in Asia on Monday, but faced the prospect of more downside if markets sense the European Central Bank could delay fleshing out its strategy in tackling the region’s debt crisis.

Source: http://sg.finance.yahoo.com/news/precious-gold-inches-fed-stimulus-010147172.html