Gold lower on mixed US economic data

CHICAGO (Aug 15)  Gold struggled for a clear direction as mixed economic signals continued to emerge from the US.

The spot price rallied overnight as St Louis Fed president James Bullard indicated that more evidence of a recovery was need Fed to start tapering its monetary stimulus polices.

Against that initial dole claimants hit a new six-year low year, while consumer inflation remained benign at 0.2% in July and by 2% over the past 12 months.

Economists suggested that on balance the flood of data today might encourage the Fed to start scaling back its bond-buying programme sooner rather than later, but it was far from conclusive.

Spot gold was trading at about US$10 lower at US$1,325, though silver continued its good recent run rising to US$21.9 while platinum added US$2 to US$1,503.

Elsewhere, figures from the World Cold Council today showed the widening gap between physical and institutional gold buyers.

Gold demand fell 23% by value  in the three months to June at US$39bn compared to a year earlier. On a volume basis, sales fell by 12% to 856t.

Gold price have tumbled by more than 20% this year due to easing concerns over the global economy, which has led to persistent selling by holders of gold in exchange traded funds (ETFs).

Purchases of jewellery, gold bars and coins surged by 53% in the three months to June as Indian and Chinese consumers snapped up record amounts.

Gold jewellery demand alone was up 37% in the second quarter at 575.5t, the highest volume for five years and 20% higher in value terms than the comparable period.

Demand in India and China could exceed 1,000 tonnes this year each, the World Gold Council said on Thursday.

ETF holdings, by contrast, fell by 402t (US$18.3bn).