Gold firms after two-day loss as weak data hurts stocksGold News

February 21, 2014 10:54
Gold firms after two-day loss as weak data hurts stocks

Gold edged higher on Thursday, snapping two sessions of losses that pulled it back from 3-1/2 month highs, as a retreat in stock markets after weak French and Chinese data boosted its appeal as an alternative asset.

The metal has fallen nearly $20 an ounce in the last two days as higher prices curbed physical demand and after minutes of the Federal Reserve's latest policy meeting reassured markets that it would keep cutting monetary stimulus.

It remains underpinned near current levels, however, as buyers of physical gold in Asia stepped in to buy on dips, and as the soft economic data undermined equities.

Spot gold was up 0.2 percent at $1,313.09 an ounce at 1106 GMT, while U.S. gold futures for April delivery were down $6.70 an ounce at $1,313.70. It hit its highest since October 31 this week at $1,332.10, before traders cashed in gains.

"Gold is trading in a tight range," Commerzbank analyst Daniel Briesemann said. "We have seen some profit taking, but it's finding some support from the weak economic data we've had, so overall there's a balance here."

Shares fell and the safe-haven yen rose on Thursday after surveys showing factory activity slowing in China and stuttering in Europe highlighted the fragility of the global economic recovery.

The dollar held firm, meanwhile, keeping a lid on gold, after minutes of the U.S. Federal Reserve's latest policy meeting showed the central bank would keep trimming its asset-purchase programme.

The Fed's monetary stimulus programme was a major factor driving gold to record highs in the wake of the financial crisis, as it kept up pressure on interest rates while stoking fears over inflation.

Expectations that the Fed was set to rein in stimulus was a key factor driving gold prices down 28 percent last year.

If you enjoyed this Post, Sign up for Newsletter

(And get daily dose of political, entertainment news straight to your inbox)

Rate This Article
(0 votes)