Gold prices hit their highest since mid-April on Monday, buoyed by speculation that the U.S. Federal Reserve may be set to unveil another round of monetary stimulus, but then steadied on caution ahead of a key central bankers' meeting later this week.
In platinum, world No.3 producer Lonmin reported violence spreading to more of its operations, raising concerns of deadly unrest flaring again after 44 people were killed amid labour strife this month.
Bullion investors are keenly awaiting a gathering of central bankers at Jackson Hole, Wyoming, beginning on Friday. Previous meetings have signaled that more policy easing is in the pipeline.
In a letter seen by Reuters on Friday, Federal Reserve Chairman Ben Bernanke told a Congressional oversight panel that the Fed has room to deliver additional stimulus measures. While recent U.S. data has been mixed, economists remain concerned about unemployment and the pace of the recovery.
Further stimulus in the form of quantitative easing - the printing of new money to buy bonds - would tend to benefit gold because it would boost liquidity while keeping long-term interest rates low and stoking fears over the potential for inflation.
Spot gold hit a 4-1/2 month high at $1,676.45 an ounce before steadying in holiday-thinned trade to $1,668.91 an ounce at 1337 GMT, versus $1,669.74 on Friday. The metal rose 3.4% last week, its biggest one-week rise since late January.. . .View Full Article