Gold Holds Below 15-Week High as Fed Cuts Weighed Against Data

London (Feb 21)   Gold held below a 15-week high in London as investors weighed indications U.S. policy makers will press on with stimulus cuts against weaker economic data.

Bullion added 0.2 percent this week after climbing to $1,332.45 an ounce on Feb. 18, the highest since Oct. 31. After slumping by the most since 1981 last year, gold rose 9.6 percent in 2014 as signs the U.S. economy wasn’t recovering in line with expectations boosted demand for a haven.

U.S. reports since last week showed retail sales and factory output unexpectedly dropped in January and housing starts slumped, while a Chinese manufacturing index fell to the lowest level in seven months, data showed yesterday. The Fed’s January meeting minutes released this week signaled policy makers supported a continued decrease in bond purchases. They cut monthly bond-buying by $10 billion at each of the past two meetings, leaving purchases at $65 billion.

The metal has been “weighed down by concerns that the Fed would continue trimming its asset-purchase program,” Abhishek Chinchalkar, an analyst at Mumbai-based AnandRathi Commodities Ltd., said in a report. “Disappointing data from the U.S. and uncertainty concerning the health of the global economy are a few factors preventing gold from heading south of $1,300.”

Bullion for immediate delivery lost 0.2 percent to $1,320.80 by 8:56 a.m. in London. Gold for April delivery rose 0.3 percent to $1,320.60 on the Comex in New York, where futures trading volume was 22 percent below the average for the past 100 days for this time of day, data compiled by Bloomberg showed.

China overtook India as the largest bullion consumer last year, the World Gold Council said this week. The metal for immediate delivery in Shanghai averaged about $2.26 more than the London price this week, compared with an average premium of $9.37 this year, according to data compiled by Bloomberg.

Silver for immediate delivery fell 0.4 percent to $21.7345 an ounce, narrowing a third weekly climb, the longest advance since August. Palladium was little changed at $737.10 an ounce. Platinum added 0.1 percent to $1,419.50 an ounce.

Source: Bloomburg