Gold Price rises on falling shares and sluggish US data
London (Apr 16) Gold rose on Thursday, heading for a second straight session of gains as European shares fell and weak U.S. data added to uncertainty over the timing of a rate rise by the U.S. Federal Reserve.
Spot gold gained 0.4 percent to $1,206.03 an ounce by 1004 GMT, while U.S. gold for June delivery rose $4.70 to $1,206.00 an ounce.
"The market needs to get past the first rate hike to move away from this no-man's land that it is trapped in," said Standard Chartered analyst Nicholas Snowdon.
"But after that, the realisation that the rate hike cycle is a lot shallower and shorter than it had previously been conceived will take some of the momentum out of the U.S. dollar rally," he said.
"We are looking at a September rate (rise) and there could still be a fairly extended period of trading in this near-$1,200 level before prices rise at year-end," he added.
The dollar recovered from an earlier one-week low against a basket of currencies that it had hit due to recent weak U.S. economic data.
The market will look to U.S. housing data later Thursday for further clues on the strength of the world's largest economy.
Data on Wednesday showed U.S. industrial output in March posted its biggest drop in more than 2-1/2 years.
The dour report was the latest sign that U.S. growth slowed sharply in the first quarter and suggested the Fed could delay raising interest rates until later this year.
Any delay in an expected hike in U.S. rates could boost demand for bullion, a non-interest-paying asset.
Traders will be monitoring a Federal Reserve policy meeting scheduled on April 28-29.
Analysts have made big cuts to expectations for gold and silver prices this year and the next after the metals, weighed down by the prospect of higher U.S. interest rates, failed to recover last year's losses in early 2015.
"(In the short term), the level of $1,200 continues to prove to be an extremely stubborn support and resistance, and ...we can expect gold prices to continue hovering about (this) level," said Howie Lee, an analyst at Phillip Futures.
Spot silver rose 0.8 percent to $16.46 an ounce. Platinum rose 0.8 percent to $1,166 an ounce and palladium was unchanged at $767.50 an ounce
Source: Reuters
