Gold heads for biggest monthly gain since July

Singapore (Feb 28)  Gold was little changed on Friday but was on track for its biggest monthly gain since July after investors and speculators chased prices higher on concerns about the pace of the U.S. economy and unrest in Ukraine.
Recent gains, though, may be hard to sustain in the absence of strong physical buying. And expectations of the U.S. Federal
Reserve continuing to reduce its stimulus programme could dent gold's appeal as a hedge against inflation.
    Cash gold was nearly flat at $1,330.86 an ounce by
0714 GMT, down from a four-month high of $1,345.35 struck on
Wednesday. Gold has gained 7 percent in February, its biggest
monthly rise since the 7.2 percent added in July.
    "The physical market in Hong Kong is still very slow and I
can't see any fresh buying interest," said Peter Fung, head of
dealing at Hong Kong's Wing Fung Precious Metals.
    "Sentiment in the market is neutral from here. Resistance is
at $1,350, while on the downside, $1,300 should be the support,"
Fung said.
    Premiums for gold bars in Hong Kong dipped to $1 an ounce to
the spot London prices from as high as $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.
   
   
    U.S. gold was also little changed at $1,331.40 an
ounce.  
    Unusually harsh winter weather appears to be behind recent
signs of weakness in the U.S. economy, Federal Reserve Chair
Janet Yellen said on Thursday, suggesting the central bank was
poised to press forward in ratcheting back its stimulus.

    The Fed's stimulus programme has pushed money into riskier
assets such as commodities and stoked inflation fears.
    The physical market was equally quiet in Singapore, a centre
for bullion trading in Southeast Asia.
    "The $1,300 to $1,350 trading range is small yet tough.
There's a lack of direction, which could push gold prices either
way, downward or upward," said a physical dealer in Singapore.
    In other markets, Asian stocks managed to shrug off early
losses on Friday and push higher, inspired by gains on Wall
Street after Yellen's comments underscored her confidence in the
U.S. economy.
    An unexpected rise in U.S. durable goods orders, excluding
transportation, also helped distract investors from an
increasingly unstable situation in Ukraine.
    Ukraine's interior minister said on Friday Russian forces
had taken control of two airports in the Crimea region and
condemned them an armed invasion and occupation.

Source: Reuters