Gold price rises after weekly drop as equities, dollar retreat

London (May 16)  Gold edged back above $1,280 an ounce after posting its biggest weekly loss since mid-March last week, with some investors disappointed by its inability to sustain a push to
15-month highs above $1,300 an ounce earlier this month.

Stock market losses and a retreat in the dollar, in which gold is priced, helped tempt back some buyers on Monday.

Spot gold was up 0.6 percent at $1,281.11 an ounce at
0940 GMT, while U.S. gold futures for June delivery were
up $10.20 an ounce at $1,282.90.
    The metal ended last week down 1.2 percent after a sharp
midweek slide, though it rebounded 0.8 percent on Friday.
    "Gold had a better close (last week) than one would have
thought a few days earlier, and it seems to be putting in quite
an impressive spell," Societe Generale analyst Robin Bhar said.
"The trigger may be the softer China data we've had, with some
misses on industrial production, retail sales. That's supporting
the gold price this morning."
    "I thought it might break down once we started testing below
$1,270, but it didn't," he added. "That may have wrong-footed
some of the people who went short."
    European shares fell in subdued trade on Monday. Data from
China over the weekend was less rosy, with April's retail sales,
factory output and fixed-asset investment all falling short of
forecasts by economists polled by Reuters.
 
    The dollar eased 0.1 percent against the euro.
    Gold has risen 20 percent this year after weak economic data
in the United States and elsewhere tempered expectations of a
near-term increase in U.S. interest rates, which would lift the
opportunity cost of holding non-yielding gold.
    Among other precious metals, silver was up 1.1
percent at $17.28 an ounce. Platinum was up 0.3 percent
at $1,053.11 an ounce, while palladium was up 0.9 percent
at $594 an ounce.
    As industry participants gathered in London on Monday for
Platinum Week, the World Platinum Investment Council said in a
report a drop in South African mine supply is set to deepen the
deficit in the platinum market this year.
    Metals Focus said in a report that platinum's slide to
seven-year lows in January marked the end of the 18-month bear
cycle that saw it nearly halve in value, as it forecast a
shortfall in supply this year.

Source: Reuters