Good week for Gold, thanks to the FED

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"14:13 27Jan12 RTRS-PRECIOUS-Gold set for biggest rise in eight weeks after Fed

    * Fed sets gold up for biggest weekly gain in eight weeks

   * U.S. growth data eyed for impact on dollar

   * Silver set for 20 pct rise in Dec, biggest since April

   * Platinum eyes largest monthly rise since Feb 2008

(Updates prices) 

    By Jan Harvey 

   LONDON, Jan 27 (Reuters) - Gold rose on Friday to head for its best weekly performance since early December after the Federal Reserve signalled a continuation of its ultra-loose monetary policy, keeping the dollar under pressure and the opportunity cost of holding bullion low.  

   Spot gold <XAU=> was up 0.1 percent at $1,722.09 an ounce at GMT at 1201 GMT, while U.S. gold futures <GCv1> for February delivery were down $4.30 an ounce at $1,722.40. Spot prices have risen 10 percent this month, recouping December's hefty losses. 

   The precious metal surged towards $1,730 an ounce on Thursday after the Fed said it planned to keep interest rates on hold until at least 2014 and signalled it would be ready to take further measures to stimulate the economy. 

   "After the Fed chairman's vow to keep the rates low until late 2014, strong buying interest was visible," said Pradeep Unni, senior analyst with Richcomm Global Services. 

   "Anxious investors have joined the fray of speculators who are now increasingly concerned by currency depreciation, as global central banks use easy monetary policies to flood markets with cash." 

   Gold's upward path is unlikely to be one-way, however, he added. "There could be some profit-taking ahead of the U.S. GDP data," he said. 

   The dollar eased 0.3 percent against the euro, further helping gold, which usually benefits from weakness in the U.S. unit. The euro <EUR=> hit a five-week high on Thursday. [FRX/] 

   Financial markets waited for U.S. growth data later on Friday. The U.S. GDP report, due at 1330 GMT, was expected to show growth accelerated to a 3 percent rate in the fourth quarter, from 1.8 percent in the third. It will be watched for its impact on the dollar, a key determinant of gold prices. 

   The single currency was still under pressure from concerns over euro zone debt, as the markets awaited a breakthrough in Greek debt talks. Athens was in negotiations with private creditors to restructure its debt. 

   The European Union and IMF want Greece to push through more budget cuts and implement a series of austerity reforms before they agree on a new bailout the country needs to avert bankruptcy, a report obtained by Reuters showed.[ID:nL5E8CR1KD]  

     

   NEW CATALYST 

   The debt crisis was a major driver of higher gold prices in 2011, as investors bought the metal as insurance against a worsening outlook for the euro zone. However, its rally stalled late last year as investors became acclimatised to the crisis. 

   "The market attitude towards gold for most of January could be summed up in two words: cautious optimism. Investors were reluctant to add to positions aggressively as memories of the disappointment in Q4 lingered," said UBS in a note. 

   "A fresh catalyst was needed and we think the FOMC outcome on Wednesday fit the bill. More accommodative policy is a very good foundation for gold to build on the next move higher." 

   Silver <XAG=> was up 0.1 percent at $33.46 an ounce. 

   Silver is on track for a near 20 percent rise in January, its biggest one-month gain since April 2011, when it rallied to a record $49.51 an ounce. Caution has dominated the market since then, as the all-time high was followed by a sharp correction. 

   Spot platinum <XPT=> was up 0.5 percent at $1,610.99 an ounce, while palladium <XPD=> was down 0.3 percent at $687.97. Platinum has outperformed palladium this month, climbing 15 percent for its biggest one-month rise in nearly four years. 

   "If the advanced economies can manage to collectively maintain even minimal growth in 2012... and global vehicles sales can eke out another year of gains as projected, platinum prices could continue to firm at least through the first half of the year," said A1 Specialized Services & Supplies, the world's biggest PGMs recycler from autocatalysts, in its January note. 

   "There has also been evidence in recent weeks that investors have begun to buy platinum and sell gold in expectation of a correction in the historically low ratio."   "

 (Editing by William Hardy)  ((jan.harvey@thomsonreuters.com)(+44)(0)(207 542 7744)

(Reuters Messaging: jan.harvey.thomsonreuters.com@reuters.net))

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Steven 
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