NEW YORK/LONDON: Gold fell on Friday, pressured by a lack of physical buyers and gains on Wall Street, but a US air strike in Iraq and tensions in Middle East supported prices, which stayed above US$1,300 an ounce.
Gold was up around one per cent for the week, its first weekly increase in four weeks.
In early trade, gold rallied to a three-week high on news US aircraft bombed Islamic fighters marching on Iraq’s Kurdish capital of Arbil.
But safe-haven buying dried up after Russia’s Defense Ministry said it had finished military exercises near its border with Ukraine.
That news sent the S&P 500 equities index about one per cent higher.
Earlier this year, gold rallied to just below US$1,400 an ounce as tensions mounted between Russia and the West over Ukraine.
Gold had unwound most of those gains in two weeks.
“It’s difficult to get overly excited given gold’s multiple failures to consistently rally on geo-political events, especially when the volumes behind this move have been rather light,” said Edel Tully, precious metals strategist at UBS.
Spot gold was down 0.3 per cent at US$1,309.66.
It rose as high as US$1,322.60, the highest since July 14.
US COMEX gold futures for December delivery settled down US$1.50 at US$1,311 an ounce, with trading volume about five per cent below 30-day average, preliminary Reuters data showed.
Bullion was pressured by data showing a strong second-quarter rebound in productivity at US non-farm businesses, reducing wage pressures and allowing the Federal Reserve to keep interest rates low.
Gold has traded in a tight range around US$1,300 over the past few weeks, supported by investor expectations that the Fed could raise rates soon.
Physical demand has not been strong enough to support prices after gold’s three per cent jump in the last three sessions.
Gold premiums in top buyer China have been stuck at US$2 to US$3 an ounce and demand is much weaker than last year, dealers said.
Natixis analyst Bernard Dahdah said gold prices would be much lower without geopolitical factors because Asian physical buying and US investment demand were both lagging. — Reuters