Gold flat below US$1,300 per ounce, heading for weekly fall

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LONDON: Gold is heading for a 1.8 per cent weekly fall, dented by hopes that diplomatic efforts can calm violence in Ukraine and by strengthening US economic data.

Fears over slowing demand in top consumer China and sustained sales from gold-backed funds also contributed to its fall below US$1,300 an ounce.

In thin Easter holiday trade on Friday, spot gold was unchanged at US$1,294.80 an ounce by 0920GMT, while gold futures for June delivery closed down 0.8 per cent at US$1,293.90 an ounce on Thursday.

There will be no London gold fixing – the twice-daily price-setting benchmark – on Friday and Monday because the UK is on holiday. The US market will be closed on Friday.

“The price of gold dropped this (last) week… as further evidence emerged of an improvement in the US economy,” Natixis analyst Bernard Dahdah said.

“As the US economy ‘normalises’, so debate at the Fed is clearly mounting over how and when to renormalise interest rates,” he added.

“If further strengthening of US economic data were to raise expectations of a renormalisation of interest rates, gold prices would once more come under pressure.”

Earlier this week the Federal Reserve chair Janet Yellen reiterated an accommodative monetary policy stance.

Low interest rates, which cut the opportunity cost of holding non-yielding bullion above other assets, have been an important factor driving gold higher.

But Yellen’s remarks were offset by US economic data pointing to activity picking up after disruptions due to harsh winter weather.

Gold’s main prop over the past few sessions has been its role as an insurance against the market risks raised by escalating tensions between Russia and the West over Ukraine.

But these eased somewhat on Thursday after the US, Russia, Ukraine and the European Union called for an immediate halt to violence.

Implying underlying investor bearishness and pessimism over the longer-term outlook, holdings in the world’s biggest exchange-traded fund, SPDR Gold Trust, fell 8.39 tonnes to 798.43 tonnes on Wednesday, the biggest daily outflow since late December.

 

Platinum down on possible end to South African strike

Platinum was unchanged at US$1,404.50 an ounce, having posted its biggest daily loss since January, down 1.9 per cent, in the previous session after South Africa’s biggest platinum producers offered to raise wages for miners in a bid to end a 13-week-old strike. — Reuters