ET:Gold steady on weak US economic data, dollar weighs
SINGAPORE: Gold hovered near $1,580 per ounce on Friday as investors clung to hopes for more monetary easing from the US central bank after weak data in the previous session, but a dollar rebound will likely cap gains.
Earlier in the week, Federal Reserve Chairman Ben Bernanke said the Fed was ready to take action if economic conditions worsened, but gave few hints on another round of quantitative easing, which would boost the inflation outlook as well as bullion's appeal.
The latest data showed factory activity in the US Mid-Atlantic region contracted in July for a third straight month and new jobless claims surged last week.
Gold has been trapped in a range between $1,530 and $1,630 for about two months, with investors looking for clear signals from the Fed and watching the euro zone struggle with its debt crisis, now in its third year.
"The range is contracting these days and I don't see much encouragement for people to have a big position," said Yuichi Ikemizu, head of commodity trading, Japan, Standard Bank.
Spot gold was flat at $1,581.25 per ounce by 0627 GMT, on course for a weekly loss of about 0.5 per cent. The contract gained half a per cent in the previous session.
US gold futures for August delivery also traded little changed at $1,581.20.
Holdings of the SPDR Gold Trust, the world's largest gold-backed exchange traded fund, dropped to 1,257.054 tonnes by July 19, suggesting lacklustre investor interest in gold.
Technicals weak
Technical signals painted a grim picture for the yellow metal in the near term.
"Gold appears to have lost its glimmer," said Tim Riddell, head of ANZ Global Markets Research, Asia. "Daily momentum is flat/neutral as it languishes in the lower reaches of a $1,555-$1,635 range. The near-term inability to regain levels above $1,600 will keep the bias towards retesting the base of this range."
Riddell said that although strong support had been built in the $1,522-$1,525 area, that level may come under severe pressure soon.
"Although any fall below $1,555 is likely to encounter solid support at $1,522-$1,525, the bias is to see a flip of the current holding range to the downside for at least a test of $1,475 if not a longer term retracement target of $1,445-$1,447."
In other precious metals, spot platinum was headed for a 1.2-per cent loss for the week, its biggest weekly decline since a 3.5 per cent decline in the week ended June 24. The metal remained in a deep discount, at about $175 per ounce, to gold.
