ET:Gold rates little changed as stimulus scale-back concerns in focus
SINGAPORE: Gold struggled to break through a tight trading range and was little changed on Friday after strong US jobs and manufacturing data added to concerns about an imminent pull-back in the Federal Reserve's commodities-friendly stimulus measures.
The number of Americans filing new claims for jobless benefits last week held near a six-year low and US manufacturing activity rose in August, suggesting the economy is starting to find a firmer footing.
Market expectations that the Fed could start scaling back its massive stimulus programme as early as September helped push the dollar and US Treasury yields higher, weighing on gold.
"A stronger dollar is discouraging some demand," said Ronald Leung at dealer and refiner Lee Cheong Gold Dealers in Hong Kong. "Demand is very quiet now but it could pick up if prices fall below $1,350."
Spot gold rose 0.04 per cent to $1,375.76 an ounce by 0647 GMT. It traded in a 1,371.91-1,379.01 range during the day and is headed for a small loss for the week after a near 5 per cent gain last week.
The minutes of a Fed meeting released earlier this week did not provide any clear signs of when the US central bank would begin tapering its $85 billion monthly bond purchases. The fear of a scale back, along with fund outflows, has pulled gold prices down by almost 20 per cent this year.
Primary dealers surveyed before the Fed's July policy meeting said they expected the US central bank to trim its asset purchases by $15 billion starting in September.
PHYSICAL DEMAND SLOW
Demand in top buyers India and China has been subdued ahead of a peak wedding and festival season that kicks off next month.
"Once the summer is over, we will see consistent buying from September through the end of the year," said Peter Fung, head of dealing at Hong Kong's Wing Fung Precious Metals.
Premiums in Hong Kong, the key supplier of gold to China, have fallen to about $4 an ounce over London spot prices as of Friday, dealers said, from $5 last week.
India may restart imports soon after the central bank clarified a new rule that brought the flow of the precious metal into the world's top gold consumer to a standstill at the end of July. The top gold consumer is battling with a record trade deficit.
