17 April 2015
Gold Holds Below $1,200, Poised For Second Weekly Dip
(Reuters) - Gold held overnight losses to trade below $1,200 an ounce on Friday and was headed for its second straight weekly drop, weighed down by uncertainty over the timing of an interest rate increase by the U.S. Federal Reserve.
Spot gold was little changed at $1,197.36 an ounce by 0327 GMT after dropping 0.3 percent on Thursday. The metal has lost nearly 1 percent this week.
Expectations that the U.S. central bank would start raising rates in June have been reassessed after recent sluggishness in U.S. economic data and many are now betting that policy will not be tightened until September.
However, strong data could still prompt the U.S. central bank to raise rates sooner, which would dent demand for bullion, and the uncertainty has led to caution in bullion markets.
However, gold failed to benefit from weak data on Thursday on U.S. housing starts and factory activity in the mid-Atlantic region, nor from a resulting drop in the dollar.
"Until upcoming economic data makes the U.S. rate picture a little more clear, we believe gold is likely to remain stuck in choppy, directionless trading in the near term," said HSBC analyst James Steel.
Adding to the uncertainty were comments from Fed officials on Thursday that showed officials at odds over the timing of the rate move.
Investors will be watching U.S. inflation data later on Friday for more clues about the economy.
Dollar moves will also be monitored. The dollar wallowed at its lowest in over a week against a basket of major currencies on Friday.
Further weakness in the dollar could push up gold prices as bullion is seen as a safe-haven asset.
Elsewhere, physical buying in the world's top two gold-consuming countries remained slow this week. Premiums in China improved only slightly and those in India slipped as prices stabilised at $1,200 an ounce.
Among other precious metals, silver and platinum were headed for weekly declines, while palladium was poised for its third straight weekly gain.