Gold slipped on Thursday, matching a one-month low hit the previous day, due to a weaker euro and falling stock markets, but a rise in ETF holdings to a new record suggested bullion still finds favour among investors.
The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said it held 790.66 tonnes of gold on January 14, up 3.06 tonnes from 787.60 tonnes on January 9, with poor prospects for the global economy igniting demand for bullion as a safe-haven asset.
Gold was trading at $US809.05 an ounce, down $US1.50 from New York's notional close. It matched Wednesday's one-month low of $US806.40, partly driven by weak stock markets that forced investors to cash in.
"Physical buying has recovered a bit. But there's still some pressure related to currencies right now. The US dollar is quite strong. That's why the funds still continue to sell,'' said Dick Poon, manager of precious metals at Heraus in Hong Kong.
"Gold still holds around the $US800 level, which I think is related to the ETF and physical buying,'' said Poon, referring to buying ahead of the Lunar New Year later this month.
Gold was around 9% below an 11-week high of $US889.55 struck in late December but dealers saw buying on dips by jewellers in Asia ahead of the Chinese New Year festive season.
Looking ahead, bullion trading would be volatile, with declines in oil and shares and firm dollar likely to spur selling, dealers said.
"Gold in ETF is still relatively strong. But the only thing I would say, mainly the US dollar affects the price at the moment,'' said David Moore, commodity strategist at Commonwealth Bank of Australia in Sydney.
"I think a lot of people have been expecting gold to go higher because of the sort of safe-haven demand but reality is that's been very inconsistent so far.''
