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Gold held steady just above $1,200 an ounce on Friday, remaining on course for its steepest weekly decline in four weeks as the dollar regained momentum, hurting the metal’s safe-haven appeal.
Spot gold was little changed at $1,205.65 an ounce by 0306 GMT, after dropping 0.3 per cent in the previous session. The metal is down 1.4 per cent for the week, its biggest fall since the week ended April 24.
Strong dollar
The dollar has gained over 2 per cent against a basket of major currencies this week, snapping a five-week losing streak, despite some losses on Thursday.
“We still would like to see a bit more conviction for gold before we advocate taking a position,’’ said INTL FCStone analyst Edward Meir, adding that there was no clear trend on the price direction.
ECB bond-buying
Upside in gold is capped by strength in the dollar, boosted by weakness in the euro, which slipped this week after the European Central Bank indicated it would accelerate the pace of money printing to buy government bonds over the next two months.
But prices are getting some support from views that the Federal Reserve was unlikely to hike US interest rates at its next policy meet in June.
US economic data
Traders will be eyeing US economic data on April consumer prices due later in the day for cues on the strength of the economy — a key factor influencing the Fed’s rate hike timing.
Higher US interest rates would increase the opportunity cost of holding non-yielding bullion. Investor sentiment towards gold has turned bearish as prices have fallen from the three-month highs reached earlier this week.
SPDR Gold Trust
Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, slid to their lowest in four months on Wednesday.
Data from Thomson Reuters’ Lipper service showed on Thursday that investors in US-based funds pulled $597 million out of funds that specialise in commodities and precious metals in the week ended May 20, the biggest outflow since December 2013.
“Gold continues to be drawn towards the $1,200 pivot point. The metal has failed to move more than 3 per cent on either side of $1,200 since mid-March,’’ said James Gardiner, a trader at MKS Group.
Resistance on the top side is near $1,212-13, while $1,200 remains the key immediate support on the downside, he said.
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