Gold prices up from 4-month low
London, Jan. 28: Gold edged higher as caution dogged the financial markets ahead of US growth data due later, having earlier hit a near four-month low as a better economic outlook dented safe-haven buying of the metal.
The yellow metal had touched a low of $1,308.00 an ounce, having fallen 2.6 per cent on Thursday after a run of firmer than expected US economic data boosted confidence in the recovery.
Traders will now be closely eyeing a US fourth-quarter growth report due at 1330 GMT. The data is expected to show the US economy gathered speed in the last quarter.
“One of the dangers in the gold price this year is that if confidence rises, and US growth and the economic recovery continues, gold’s allure as a hedge against risk is somewhat diluted,” said, Mr V.M. Group analyst, Mr Carl Firman.
European stocks retreated as traders took to the sidelines ahead of the data after a softer session in Asia, and the dollar was little changed versus the euro.
The single currency remains supported, however, by the European Central Bank’s hawkish tone on interest rates, analysts said, with markets pricing in more than one 25 basis point hike by year-end.
With the Federal Reserve showing few signs of tightening monetary policy, this may lead to further dollar weakness versus the euro this year, which typically would support gold.
However, the usual inverse link between the two has eased in the last year. Investment demand for gold has been soft this year, with holdings of the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, down another 3 tonnes on Thursday. London’s ETF Securities reported a 1.3-tonne outflow from its gold exchange-traded products on the same day.
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