Gold fell on Thursday as risk aversion receded due to robust economic data in Europe and the United States, but brisk physical demand limited the metal’s losses.
Spot gold was at $1,221.65 an ounce by 0908 GMT, down from $1,224.30 an ounce late in New York on Wednesday and below this week’s peak around $1,230 an ounce.
The euro zone’s debt problems and fears that they could derail the region’s fragile economic growth had boosted gold’s safe-haven appeal and driven it to a record high of $1,248.95 an ounce in mid-May.
“Better macro sentiment, equity markets higher and the euro is off its lows — all of this is contributing to some risk appetite coming back,” said analyst Robin Bhar at Credit Agricole. “In that sort of environment, you’d expect gold to be slightly less attractive,” he added.
The dollar fell as a rise in global share markets on the back of strong U.S. economic data helped to cool risk aversion. The same data gave a boost to Asian stocks, which posted their biggest single-day gain in four weeks.
In Europe, shares rose to a two-week high after the Markit Eurozone Services Purchasing Managers’ Index showed the services sector expanded in May and the Final Services Employment Index showed it first jobs growth since June 2008.
U.S. gold futures for August delivery added $2.0 an ounce to $1,224.6.
Investors awaited the release of U.S. payrolls data on Friday, which is expected to show 513,000 jobs were added to the economy in May — a fifth straight month of gains. This could potentially boost the dollar and weaken bullion’s safe-haven appeal.
On Thursday, weekly jobless claims data from the United States is due at 1230 GMT.
Robust physical demand
But the underlying interest in gold remained intact, Bhar said. “The retail appetite is definitely there...Maybe more dip demand as prices come back.”
The world’s largest gold-backed exchange-traded fund, SPDR Gold Trust said its holdings rose to a record at 1,268.539 tonnes as of June 2 from 1,268.234 tonnes in the previous business day.
In India, the world’s top physical gold market, some jewellers stocked up as bullion prices dropped from a two-week high, while selling from other consumers in Asia also slowed, keeping premiums for gold bars steady.
“I think we need some news to push up gold, otherwise we’ll get stuck in a range of $1,200 to $1,225,” said a bullion dealer in Hong Kong.
Silver was at $18.55 an ounce versus $18.45 an ounce.
“If risk appetite returns to financial markets in the coming months and we see a waning of investor appetite for the precious metals, we believe that silver will be more vulnerable to a price correction than gold,” analysts at RBS said in a note. Spot platinum was at $1,557.50 an ounce versus Wednesday’s $1,545 an ounce while spot palladium was at $460 an ounce from $454.50.
