Gold edges up but set for weekly loss on dollar, data

London (Oct 24)   Gold inched up on Friday as European shares fell but was set to close down for the week due to a firm dollar and robust economic data that dented demand for the metal as an insurance against risk.

Spot gold was up 0.1 percent at $1,233.10 an ounce by 1157 GMT, after slipping more than 1 percent in the previous two sessions. US gold futures were up 0.3 percent at $1,233.00 an ounce.

Following two weeks of gains, the metal was headed for a weekly loss of around 0.5 percent, depressed by the rebound in the dollar. "A better run of US data has calmed nerves about the wider economy, and that has put pressure on gold in the past few days, as it had been enjoying a safe-haven bid," Macquarie analyst Matthew Turner said.

"This could continue next week as we don't think there is going to be any substantive change of direction from the Federal Reserve, meaning QE (quantitative easing) will come to an end."

The dollar was down 0.1 percent against a basket of major currencies, but was set to post a near 1 percent rise for the week after two weeks of declines.

Strong global economic data on Thursday calmed investor nerves after a recent sell-off, prompting many to pull out of gold and other assets perceived as safe.

The next main market focus will be on the Federal Reserve's meeting on Tuesday and Wednesday. The consensus view is that the US central bank will decide to wrap up asset purchases under its third round of quantitative easing. Clues are awaited on the timing for its first interest rate increase.

The Fed had been expected to raise rates in mid-2015, but concerns about the global economic recovery increased speculation in recent weeks about a possible delay.

EBOLA CONCERN

Gold has benefited in the years after the 2008 financial crisis from low interest rates and increased central bank liquidity.

The metal was helped by a fall in European shares on Friday as investors fretted about news that a doctor who recently returned to New York from West Africa had tested positive for Ebola.

Holdings in SPDR Gold Trust, the world's top bullion exchange-traded fund, fell to their lowest since late 2008 this week in a sign of lingering bearish sentiment in the bullion market.

The fund this week recorded its biggest daily percentage drop in holdings in a year, despite a price jump to a six-week high.

However, the metal was supported by a jump in sales in India during the festivals of Diwali and Dhanteras.

India is the world's second-biggest consumer of gold behind China.

Among the other precious metals, spot silver rose 0.4 percent to $17.21 an ounce.

Platinum was up 0.2 percent at $1,251.50 an ounce, while palladium rose 0.8 percent to $783.25 an ounce, making it the week's best performer among precious metals with a 4 percent jump. "For the moment it looks like palladium is the favoured metal out of the precious four," MKS Group said in a note.

"Supply concerns out of Russia and rumours of stockpiling are helping a positive technical scene on the charts."

Source: Reuters