LONDON. — Gold steadied around US$1 330/oz last week and was on track for its biggest monthly gain in seven months as persistent concerns about a slowdown in the US economy hurt the dollar.
Gold has gained nearly 7 percent in February, its biggest monthly rise since July, mostly due to weak data in China and the US and political and economic turmoil in Ukraine, which lifted demand for the metal as an insurance against risk.
“In general whether it’s Ukraine, the US economic data or worries about China, there seem to be a lot more reasons than there were six weeks ago for looking at gold,” Nomura analyst Tyler Broda said.
Spot gold was down 0,1 percent at US$1 329,58/oz below a four-month high of US$1 345,35/oz struck last Wednesday.
US gold futures for April delivery fell US$2 to US$1 329,80/oz.
The dollar dropped 0,5 percent versus a basket of main currencies, mostly due to euro strength after eurozone inflation data came in above expectations, easing pressure on the European Central Bank to loosen monetary policy next week.
US data showed fourth-quarter growth expanded at a 2,4 percent annual rate, down sharply from the 3,2 percent pace reported last month. Separately, the pace of business activity in the US Midwest rose slightly in February, beating expectations.
In her testimony to the US Senate Banking Committee last Thursday, Federal Reserve Chair Janet Yellen acknowledged unusually harsh winter weather was behind recent signs of weakness in the US economy, suggesting the central bank was poised to press forward in ratcheting back its stimulus.
The Fed trimmed its monthly bond purchases by US$10 billion at each of its previous two meetings. Its next meeting is scheduled for March 19.
“The next Fed meeting is really the key because by then some of the economic data should have unambiguously not been weather affected and if that still shows a slowdown the Fed might have to change their policy again, which doesn’t necessarily mean an end of tapering but may mean some other loosening,” Macquarie analyst Matthew Turner said.
The physical market was quiet in Singapore, a centre for bullion trading in Southeast Asia.
Premiums for gold bars in Hong Kong dipped to US$1 an ounce to the spot London prices from as high as US$1,70 last week, which reflected a slowdown in demand from China.
Weakening differentials between 99,99 percent purity gold on the Shanghai Gold Exchange and cash gold discouraged imports. On Friday, the Shanghai market was trading at discounts to almost on par with cash gold.
Silver rose 0,2 percent to US$21,28/oz. Platinum was up 0,4 percent to US$1 450/oz and palladium gained 0,5 percent at US$742,25/oz.
The platinum group metals had risen about 1,5 percent after the second biggest platinum miner Impala Platinum decided to declare force majeure on supply contracts, which allows certain terms of an otherwise legally binding agreement to be ignored. — Reuters.