US MIDDAY: gold up

Gold rose nearly 1 percent to its highest in a week on Wednesday as US stock markets held firm after re-opening following Hurricane Sandy, but gold ended lower for the month, snapping four straight monthly gains. Prices broke back above $1,720 an ounce as US traders returned to their screens after a two-day closure following a storm that battered the US east coast.
Spot gold was at $1,720.90 at 1842 GMT, up 0.7 percent, while US gold futures for December closed up $7 at $1,719.10. The metal dropped 2.8 percent during October, its first one-month decline since May. On October 5, Gold hit an 11-month high above $1,795, after the Federal Reserve unveiled new measures to boost the US economy. Stimulus measures heighten inflation concerns while maintaining downward pressure on interest rates, both positive factors for gold.
However gold retreated in line with other nominally higher-risk assets such as stocks and other commodities later in the month, as euphoria from the move petered out, with confidence in its rally dented by a failure to break $1,800 an ounce. Gold "has been forming a good base over the last couple of days," Saxo Bank vice president Ole Hansen said. "Japan quantitative easing yesterday returned the focus to monetary stimulus, forward-looking inflation has been creeping higher as well."
UBS said in a daily market report that the recent consolidation of gold prices above $1,700 an ounce was a healthy exercise in preparation for the next leg higher. "There are those who are still looking for another dip, perhaps one that offers an opportunity to jump in sub-$1700, between now and year-end," it said.
Gold importers remained cautious, as prices continued to be supported by a weaker rupee and firm overseas markets ahead of festivals. India's festival season peaks in November with Diwali, the Hindu festival of lights. Weddings also take place at this time, with gold jewellery part of the dowry daughters receive from their parents. Spot platinum was up 1.2 percent at $1,566.74 an ounce and palladium was up 1.9 percent at $605 an ounce. Silver was up 1.3 percent at $32.23 an ounce.