ET:Gold holds steady amid China absence and stronger dollar
SINGAPORE: Gold was little changed in Asian trading on Monday, after posting its first loss in six weeks, as the strength in the US dollar and the absence of key buyer China weighed on prices.
Markets in China, the world's biggest buyer of bullion, are closed until Friday for the Lunar New Year holiday. Hong Kong, a major trading hub, is shut on Monday.
Traders said until China comes back, the focus during Asian hours will be on any developments in the emerging markets, where the US economic growth and the Federal Reserve's move to taper stimulus have caused capital outflows.
"The uncertainty over a global economic recovery, despite the obvious uptick in the US economic outlook, remains to be the missing jigsaw puzzle piece in determining gold price trend in 2014," OCBC analysts said in a note.
They said more trouble in emerging markets could increase gold's appeal as a safe haven.
"In addition, the surprise surge in Chinese gold demand, should it persist, may provide support for gold at least at its $1,200 per ounce handle at this juncture."
Spot gold was unchanged at $1,243.10 an ounce by 0744 GMT. Bullion fell 2 per cent last week - its first loss since the week ended Dec. 20.
Asian shares lost more ground on Monday as strains in emerging markets show little sign of abating, while growing pressure for another policy easing in Europe shoved the euro to 10-week lows. The dollar index recorded its best monthly gain in 8 months in January.
Chinese demand was robust earlier this year until the last week of January as consumers bought gold for good fortune and as gifts for the lunar new year.
Premiums in Shanghai had fallen to $4 just before the holiday from over $20 in the beginning of the month, indicating a drop in buying interest.
"Seasonality shows that the Shanghai-London price differential, a key measure of the strength of Chinese domestic demand, is likely to remain weak over the next two weeks," said ANZ, adding gold will not be able hold rallies without China.
In other news from the physical markets, sales of the US Mint's American Eagle gold coins fell 40 per cent year-on-year in January, typically the busiest month of the year, as uncertainty over bullion prices continued to dampen interest from collectors.
The Perth Mint's gold and silver sales climbed in January from the previous month as demand for coins and bars remained robust after a sharp drop in prices last year.
