The strength of bullion amid growing expectations for the U.S. central bank to scale back its bond buying program in September is a sign that a solid base may have formed in the yellow metal, say strategists.
"If tapering does occur in September, it will be more 'buy the rumor, sell the fact.' Certainly the entire market is expecting it already. We'll see gold prices continue to rise quite strongly over the next couple of months," said Andrew Su, CEO of Compass Global Markets.
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"The reaction to (Fed) minutes was lackluster, under most circumstances you would have gold prices to fall a lot more, and they haven't. That reflects the strong buying and heavy interest in gold particularly out of Asia," Su, who expects gold to cross $1,400 over the next week, added. Gold has risen 11.5 percent since July, erasing some of the hefty losses seen in the first six months of the year.
According to the Federal Reserve's July minutes, officials thought it would soon be time to slow the pace of the bond buying "somewhat," but some counseled patience.