Gold steady despite Fed infusion

The move, aimed at reviving the US economy, fails to strenghten the dollar.

Gold was little changed in Asia after the Federal Reserve announced a plan to boost financial system liquidity to ease a shortage of credit.

The Fed said yesterday it will make as much as $200 billion available to revive lending among banks. The plan drove the Standard & Poor's 500 Index to its biggest gain in more than five years.

"There's going to be period of uncertainty until we are clear about what impact this move will have on a wide range of markets including equities and commodities," Gerard Burg, minerals and energy consultant at National Australia Bank, said on Wednesday. "It's a likely outcome that gold may pause here for a few weeks."

Gold for immediate delivery gained 72 cents, or 0.1 per cent, to $974.02 an ounce at 3 pm Singapore time, within 2 per cent of its record $992.05 on March 6. Silver fell 2 cents, or 0.1 per cent, to $19.65 an ounce, compared with $21.23 on March 6, the highest since 1980.

Crude oil was little changed near a record in Asian trading after the Fed's announcement.

Gold for April delivery was little changed at $975.20 an ounce at 3:08 pm Singapore time in after-hours electronic trading on the Comex division of the New York Mercantile Exchange. Futures reached a high of $995.20 March 5.

The Fed pledged yesterday to lend, in return for mortgage debt, $200 billion of Treasuries to securities firms that trade directly with the central bank.

Officials told reporters later that the program may escalate from there as the central bank seeks to break the logjam in the home-loan market.

"Is the situation over? Probably not," Jon Nadler, analyst at Kitco Minerals & Metals, wrote in a report yesterday. ``But concerted efforts are being made to bring a resolution, and that has speculative participants taking a fresh look at just how deep they may be into positions in various alternative assets.''

Banks around the world have posted $188 billion in writedowns and credit losses stemming from the collapse of the subprime-mortgage market. The S&P 500 Financials Index has dropped 10 per cent this year.

Gold for February 2009 delivery on the Tokyo Commodity Exchange gained 34 yen, or 1.1 per cent, to 3,252 yen a gram ($982 an ounce) as of 4:05 pm local time.

June delivery gold on the Shanghai Futures Exchange fell 0.2 per cent to 224.46 yuan a gram ($982 an ounce).