2014.02.2506:20:14UTC+00Gold close to 16-week peak; rally seem overdone on taper outcome

Gold futures reported near a 16-week high, even as some investors seen the rally excessive on anticipations the Federal Reserve will retain its plan to cut down US stimulus.

Bullion to be delivered immediately was settled at $1,336.68 per ounce at 9:29 a.m. in Singapore, previously $1,336.98, when prices touched $1,339.09, the most since October 31. The 14-day relative strength index advanced yesterday over level 70 that indicates to those who analyze charts that prices may be set to invert, and was at 71.9 today.

Gold is going for the first back-to-back monthly profit since the two-month gain through August as data that traced estimates ignited concern the US recovery may be wavering. Bullion advanced 11% this year as the Fed trimmed asset buying, precipitating a lump in emerging market assets and amplifying haven demand. Last year, bullion dropped the most since 1981 as equities surged and investment holdings narrowed.

Increasing tension in Ukraine and concern that a downturn in China is intensifying further hurt emerging market assets and escalated demand for wealth protection. SPDR Gold Trust holdings, the largest exchange-traded product supported by bullion, yesterday stretched for a second day, the biggest series of gains since the two days through January 30.

China Demand

Higher gold prices have wounded demand in China, the largest consumer. Volumes for the benchmark contract on the Shanghai Gold Exchange fell for a second day yesterday and metal to be delivered immediately has listed at a discount to London prices since February 20.

Gold to be delivered in April plunged 0.2% to $1,335.80 per ounce on the Comex in New York, after advancing to $1,339.20 yesterday, the most for a most active contract since October 31. Silver settled at $21.9685 per ounce, previously $21.9741, when prices touched $22.1807, the most since Oct. 31.

Platinum missed 0.3% to $1,433.88 per ounce, while palladium dived 0.1% to $742.50 per ounce, following both metals ascended to one-month peaks yesterday.