LONDON: Gold edged lower yesterday and was set to close down for the week due to a firm dollar and robust economic data that dented demand for the metal as an insurance against risk.
Spot gold was down 0.2 percent at $1,229.07 an ounce by 1451 GMT, after slipping more than 1 percent in the previous two sessions. US gold futures were up 0.1 percent at $1,229.90 an ounce.
Following two weeks of gains, gold was headed for a weekly loss of about 0.5 percent, depressed by the dollar’s rebound.
“A better run of US data has calmed nerves about the wider economy, and that has put pressure on gold in the past few days, as it had been enjoying a safe-haven bid,” Macquarie analyst Matthew Turner said.
The dollar was down 0.1 percent against a basket of major currencies, but was set to post a near one percent rise for the week after two weeks of declines.
Strong global economic data on Thursday calmed investor nerves after a recent sell-off, prompting many to pull out of gold and other assets perceived as safe.
The next main market focus will be on the Federal Reserve’s meeting on Tuesday and Wednesday. The consensus view is that the US central bank will decide to wrap up asset purchases under its third round of quantitative easing. Markets will be looking for any clues on the timing of its first interest rate increase.
The Fed had been expected to raise rates in mid-2015, but concerns about the global economic recovery have increased speculation in recent weeks about a possible delay. “I still think that this is the last QE that we will see, the Fed will go ahead but they are not switching to a hawkish mentality where they will immediately raise interest rates,” Natixis analyst Nic Brown said.
Gold has benefited in the years after the 2008 financial crisis from low interest rates and increased central bank liquidity.
The metal was helped by a fall in European shares on Friday on investor jitters over news of a doctor who recently returned to New York from West Africa testing positive for Ebola.
Holdings in SPDR Gold Trust, the world’s top bullion exchange-traded fund, fell to their lowest since late 2008 this week in a sign of lingering bearish sentiment in the bullion market.
The fund this week recorded its biggest daily percentage drop in holdings in a year, despite a price jump to a six-week high.
However, there was support from a jump in Indian sales during the Diwali and Dhanteras festivals. India is the world’s second-biggest consumer of gold behind China.
Reuters
