Gold off 2-month low but headed for 4th losing week

Singapore: Gold prices was little changed on Friday and were set for their fourth-straight week of losses, after weak economic data from China and the euro zone sent bullion to a two-month low in the previous session.

Surveys showed shrinking manufacturing activity in China and an unexpected turn for the worse in the euro zone economy in March, fanning worries of faltering growth in these regions. The traditional perception of gold as a so-called safe-haven asset has been shifting in recent months, with the economic crisis in Europe hurting demand for the metal.

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It has also been hit by US Treasury yields climbing to multi-month highs and an increase in the cost of dollar funding. “It seems that funds have been trying to re-allocate their assets,” said Peter Tse, director at ScotiaMocatta in Hong Kong.

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“With US interest rates higher, holding metals will be a little more expensive and people will try to scale down their positions.” Tse expects gold to test its overnight low of $1,627.68 in the next few sessions, as the overall trend remains bearish.

Spot gold was little changed at $1,645.99 an ounce by 0300 GMT, on course for its fourth consecutive week of losses, with a 0.5-percent decline. US gold edged up 0.2 percent to $1,646.10. Technical analysis suggested that spot gold might rebound to $1,669.40 an ounce during the day, said Reuters market analyst Wang Tao.

Weighing on market sentiment, SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.59 percent, or 7.553 tonnes, to 1,282.69 tonnes on Thursday. That marked the biggest one-day drop in tonnage terms in three months.

The reduction of gold ETF positions by hedge fund manager John Paulson in late December helped drive bullion prices as low as $1,521.94, down 21 percent from an all-time high above $1,920 hit last September. Meanwhile, spot silver was barely moved at $31.54 an ounce, on course for a 3.1 percent weekly decline.

The gold-silver ratio, a gauge of how many ounces of silver buy an ounce of gold, rose to 52.2, its highest level since the end of January. The average in the past 30 years stands at just below 64.

Spot platinum inched up 0.4 percent to $1,619.94, headed for a weekly slide of nearly 3 percent, its biggest weekly loss in three months.

Spot palladium rose 0.3 percent to $650.95, also on course for its sharpest one-week fall since late December, with a 6.9-percent decline.

Reuters