Gold jumps $12 ahead of next week's FOMC

New York (Oct 24)   Gold gained $12 to trade at 1348 ahead of next weeks FOMC meeting. Although the odds are that the FOMC will do nothing, there still is some reasoning that they might start tapering in the near term, while other analysts think Mr. Bernanke will surprise investors by adding a bit of stimulus to help boost the effects of the government shutdown as his tenure is about to end. Gold prices are expected to continue move higher today due to a weaker dollar and optimism over Feds prolonged duration for bond buying program. US unemployment claims would be eyed for further cues.

Gold prices fell on Wednesday due to profit booking and falling oil prices also reduced golds demand as an inflation hedge. Prices were also hurt as physical demand from China remains weak. A possible credit crunch in the Chinese money market has pushed rates to the highest level since July, curbing demand for gold. Central banks efforts to control inflation can further put pressure on demand for gold as an inflation hedge. Gold premiums in India continued to remain near records at $120 an ounce due to supply constraints.

Persuaded by upbeat economic release from Asias largest economy and optimism about continuation of US Federal Reserves assets purchase program, commodities across the globe are trading mixed with a mild bullish sentiment. Earlier, Chinese manufacturing PMI published by HSBC showed that buoyed by new factory orders the Purchasing Managers Index (PMI) in the region peaked to a multi month high last month. Gold regained its northward move after the biggest loss in seven days as spectators weighed the outlook for the Federal Reserves stimulus measures.