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LONDON. – Gold prices eased on Friday from the previous session’s six-week high as the dollar steadied after its biggest one-day drop in three months, and bullion-backed exchange-traded funds registered more outflows.
The metal remains on track for a fifth straight weekly gain, however, as world stocks headed for their worst week this year, boosting interest in gold as an alternative asset.
Prices rallied more than 2 percent on Thursday as a drop in the dollar and a call from India’s ruling party chief to review import restrictions on bullion prompted short-covering.
Spot gold was down 0,3 percent at US$1 260,10 an ounce at 1019 GMT, while US gold futures for February delivery were down US$2,50 an ounce at US$1 259,80.
“Yesterday gold’s move was down to the very weak US dollar, falling US bond yields and declining equities, while in addition, we had some calls from India to ease import restrictions,” Commerzbank analyst Daniel Briesemann said. “That also contributed to the price rise.”
“On the other hand we’ve seen a renewed strong outflow from the gold ETFs, which leads us to the conclusion that the price increase yesterday was mainly speculatively driven. That raises questions over whether it was sustainable.”
“We think, all things being equal, that we may see some more setbacks before gold can move higher.”
Gold is on track to end the week up 0,5 percent, recording a fifth straight weekly gain for the first time since September 2012. Global stock prices fell as worries mounted over an economic slowdown in China and US monetary policy.
The world’s largest gold-backed ETF, New York’s SPDR Gold Shares, said its holdings declined by 5.4 tonnes on Thursday, bringing its outflow for the week to 6.6 tonnes. It logged its first weekly inflow since early November last week.
Chinese demand eased, with premiums on the Shanghai Gold Exchange dropping to US$10 an ounce from US$12 the previous day.
China took over from India as the world’s leading consumer of gold jewellery in 2013, data from metals consultancy Thomson Reuters GFMS showed.
Gold premiums in India, the second-biggest buyer of the metal, fell more than 30 percent on Friday from earlier this week on speculation over a possible easing of restrictions on bullion imports.
Premiums were quoted at US$75 to US$85 an ounce on London prices on Friday, compared with US$110 on Wednesday. – Reuters.
Online Reporter