Gold nears worst week since March as stocks climb, demand dips
London (May 30) Gold edged lower on Friday, extending three days of losses and staying on track for its biggest weekly decline in two months after upbeat U.S. data and signs of softening demand in Asia weighed on prices.
Spot gold was down 0.2 percent at $1,253.70 an ounce at 1147 GMT, not far from Thursday's $1,251.10, which was its lowest in almost four months. U.S. gold futures for June delivery were down $2.80 an ounce at $1,253.50.
Week on week, the metal is down 3 percent, the most in any week since late March. The market has gained support in recent months from a tense stand-off between Russia and the West over Ukraine.
"The move into riskier assets like equities, which have performed well, is weighing on gold," Peter Fertig, a consultant at Quantitative Commodity Research, said. "Furthermore, the market is not as worried about Ukraine as it has been in March and April. That's reducing support from that side for gold."
Expectations remain that stronger U.S. economic data will support the Federal Reserve's policy of paring back its bullion-friendly stimulus measures, he said, despite Thursday's weak first-quarter growth data.
The S&P 500 index climbed to its third record-high close in four sessions on Thursday as traders shrugged off the report showing the economy shrank in the first quarter and bet on improvement in the second quarter.
"It was well known that yesterday's (weak) first-quarter GDP figures for the United States were distored by the extremely severe winter," he said. "Underlying data indicates that there has been a catch-up in the current quarter."
Global shares steadied on Friday after hitting record highs, with investors positioned cautiously on the last trading day of the month ahead of next week's European Central Bank policy meeting. A softer tone to stocks has helped gold to steady.
ASIAN DEMAND SHRUGS OFF LOWER PRICES
Gold premiums in India almost halved this week on hopes that the new government would ease restrictions on imports of the precious metal, while demand in the rest of Asia failed to pick up despite a drop in prices.
Premiums in top buyer China have been little changed this week. Data this week showed that imports from main conduit Hong Kong fell to a 14-month low in April, with importing banks adequately stocked amid softer demand and a weaker yuan currency.
"We are seeing weakness across Asia, in China, Thailand and other parts of Southeast Asia," said one dealer in Hong Kong. "It's been very quiet because people bought a lot last year and they are holding back now. I don't think we will see any significant increase until the second half of the year."
