SINGAPORE — Gold steadied just below $1,590 an ounce early on Thursday after slipping in the previous session, when upbeat US retail sales strengthened the outlook for the world’s top economy and dampened bullion’s safe-haven appeal.
Spot gold was little changed at $1,586.34 an ounce by 4.09am GMT. Indications that the global economy, led by recent positive data from the US, is on a better footing this year has driven investors away from gold, with spot prices down 5% this year.
US gold was similarly steady at $1,585.50 an ounce in midday trade.
"We already initiated a sell gold recommendation last December," said Henry Liu, head of commodity research at Mirae Asset Securities in Hong Kong.
"As long as the US economy is coming back we do not think gold prices can rise."
The dollar hovered near seven-month highs against a basket of currencies on Thursday after bullish US retail sales data fanned hopes the economy can cope with the tax hikes and spending cuts that kicked in this year.
US retail sales expanded at their fastest pace in five months in February, the latest sign of momentum for an economy facing headwinds from higher taxes and pricier gasoline.
But output at factories in the eurozone fell more than expected at the start of 2013, and production in France and Germany slipped in the latest sign the bloc is struggling to emerge from recession.
Reflecting a lack of conviction in the gold market, holdings of the largest gold-backed exchange-traded fund (ETF), New York’s SPDR Gold Trust were little changed on Tuesday from Monday, while that of the largest silver-backed ETF, New York’s iShares Silver Trust SLV rose 0.5%.
"We think gold lacks both technical momentum and investment interest to recover significantly from current levels," Credit Suisse said in a client note.
Platinum a sell
Investors are also ready to sell into any platinum price strength because the yen has been weakening against the dollar, a trader in Singapore said.
A stronger dollar makes commodities priced in the greenback more expensive for holders of other currencies. The yen weakness in particular, driven by the Bank of Japan’s shift towards radical easing to end nearly two decades of deflation, is encouraging further sales, the trader said.
"This selling on Tocom (the Tokyo Commodities Exchange) triggered stops in the US futures and while we have seen a small bounce, there are plenty of sellers waiting for a pop higher," he added.
