RTRS:PRECIOUS-Gold ticks up but stimulus, weak demand weigh
* Gold declines over 5 pct in as many weeks
* Investors still holding gold for portfolio insurance - ETF
Securities
(Updates prices)
By A. Ananthalakshmi
SINGAPORE, Sept 27 (Reuters) - Gold edged up on Friday amid
a softer dollar, but was on track to end the week largely steady
due to persistent uncertainty on when the U.S. Federal Reserve
would curb its economic stimulus and slow physical demand from
Asia.
The Fed surprised markets earlier this month when it decided
to stick with its massive stimulus measures but some officials
have since said that the U.S. central bank could still begin
tapering later this year.
Bullion's fall over the last four weeks has been marginal
except for the week before the Fed's policy meeting when prices
fell nearly 5 percent.
"Resolution of the fiscal budget impasse and debt ceiling,
and economic indicators favouring non-tapering could lift prices
of gold," said Joyce Liu, investment analyst at Phillip Futures.
"The first two will spur safe-haven demand for gold and all
three have to meet the mark before the Fed will be completely
comfortable with tapering."
U.S. House of Representatives Republicans on Thursday
refused to give in to President Barack Obama's demand for
straightforward bills to run the government beyond Sept. 30 and
to increase borrowing authority to avoid a historic default.
The move does not bode well for prompt resolution of these
fiscal battles that could lead to a government shutdown on Oct.
1 and a default in mid-October.
Spot gold edged up 0.1 percent to $1,325.11 an ounce
by 0646 GMT. The dollar index dropped to 80.46 by 0646
GMT, after hitting a day high of 80.594.
Investors also took in mixed economic data from Thursday.
Contracts to buy previously owned U.S. homes fell for the third
straight month in August but fewer Americans filed new claims
for jobless benefits last week, giving conflicting signals on
the health of the economy.
FUND FLOWS NEUTRAL
Holdings in SPDR Gold Trust, the world's largest
gold-backed exchange-traded fund, were unchanged on Thursday.
The ETF saw huge outflows earlier this year on fears of stimulus
tapering, but the flows have since slowed.
"Clients are not looking to increase their gold holdings at
the moment as they are going to more cyclical assets," said
Danny Laidler, head of ETF Securities' Australia and New Zealand
business.
"Having said that, a lot of clients are still holding gold.
The reason is that they feel the need for portfolio insurance
and there is still a lot of concern about dollar debasement."
Physical demand has also remained soft as consumers expect a
further drop in prices.
