Gold looking good short-term. The next big hurdle to clear is $875
Gold Trades Near Five-Week High in London on Rate Expectations
By Nicholas Larkin
Nov. 27 (Bloomberg) -- Gold traded close to a five-week high in London as speculation the Federal Reserve will cut interest rates weakened the dollar, boosting bullion's appeal as an alternative investment to the U.S. currency.
The biggest drop in U.S. consumer spending in seven years fanned speculation the Fed will cut rates to avert a prolonged recession. Gold trading may slow for the rest of the week as most U.S. markets are closed today for the Thanksgiving holiday.
``Everybody's waiting for the Fed to announce further rate cuts, which will be very price supportive for gold,'' Bayram Dincer, a commodity analyst at Dresdner Bank, said by phone from Zurich.
Gold for immediate delivery added $1.39 cents, or 0.2 percent, to $814.24 an ounce by 11:33 a.m. in London. December futures were $4, or 0.5 percent, higher at $812.50 in electronic trading on the Comex division of the New York Mercantile Exchange.
The metal rose to $813.50 in the morning ``fixing'' in London used by some mining companies to sell production, from $812.50 at the previous afternoon fixing. Bullion, heading for a fourth weekly gain, has lost 21 percent since reaching a record $1,032.70 in March.
Crude oil was down 1.2 percent at $53.25 a barrel in New York and the dollar was 0.2 percent lower against a basket of six major currencies. Falling oil prices typically reduce demand for gold as a hedge against inflation.
`Further Investment Interest'
The Federal Reserve meets Dec. 16 and may cut key lending rates to 0.75 percent from 1 percent, according to the median of 69 estimates in a Bloomberg survey. It pledged $800 billion this week to help ease the credit crisis for homeowners, consumers and small businesses.
