US MIDDAY: gold stays up

Gold extended its rally toward a record high on Wednesday, fuelled by uncertainty over Greece's debt crisis and expectations of loose global monetary policies after the Federal Reserve said the pace of US economic recovery was slower than expected.
Bullion, which broke above its recent range after rising in six of the past seven sessions, held onto early gains after the Fed reaffirmed that it will maintain interest rates exceptionally low for an extended period. It was also underpinned by a rebound in Brent crude oil and a warning from Bank of England policymakers about a possible need for a second round of quantitative easing (QE), which drove gold in sterling to a record.
"It's a reminder that central banks can do more. I think with the Fed, some gold investors see a bigger chance of QE3 than maybe the wider market, so perhaps it's the gold investors you have to be looking for rather than the wider market," said Mitsubishi analyst Matthew Turner. The Fed, however, showed no inclination toward a third round of stimulus as it concluded a regular policy meeting, reiterating its stance that the pace of US economic recovery was proceeding more slowly than it had expected though it was primarily because of temporary factors.
Spot gold was last up 0.5 percent at $1,553.80 by 12:36 pm EDT (1636 GMT), after rising to $1,557.75, the highest since May 2, when bullion struck a lifetime high of $1,575.79. The metal is up 3 percent since June 13, partly driven by investor fears over European sovereign debt. US August gold futures were up $8.10 at $1,554.50 an ounce. Silver was also up 0.7 percent at $36.55 an ounce.
On the gold options front, strong interest in bullish option strategies indicated investors are expecting prices in underlying gold futures to rise. COMEX gold options floor trader Dominick Cognata said there have been decent buying in calls and call spreads, with the heaviest volume in out-of-the-money December and August call options with the $1,600 strike.
Gold in Australian dollars rose by as much as half a percent to a session peak of A$1,467.54 an ounce, its highest since early July last year, while gold in euros was 0.5 percent higher, off a recent record 1,088.11 euros. Bullion investors are paying close attention to talks over US debt limit, as US lawmakers launched a crucial week of debt-reduction talks seeking to break through differences on taxes and healthcare. Gold's rally swept the platinum group metals off their session lows and into positive territory. Platinum was up 0.1 percent at $1,746.24 an ounce, while palladium was also up 0.1 percent at $765.47.