Gold around 2-1/2-mth low on risk aversion ahead of U.S. data
London (Apr 24) Gold prices were steady on Thursday, hovering above a 2-1/2-month low hit earlier in the week, as a rally in equities dimmed its appeal as an alternative asset and investors remained cautious ahead of more U.S. economic data and any further developments in Ukraine.
Market players were waiting for the release of U.S. jobless claims and durable goods orders data for clues on the health of the world's largest economy ahead of next week's meeting of the Federal Reserve Open Market Committee on interest rates.
"We are in a bit of a fragile state in gold ... we are still having some potential support coming from escalating tensions in Ukraine but disappointing U.S. data yesterday weakened the dollar and bond yields without having any impact on gold," Saxo Bank head of commodity strategy Ole Hansen said.
"At the moment investor interest remains subdued, ETFs outflows continue and we will eventually try to check how strong the around the $1,277 area is around the $1,277 area and if we break it we could see a sharp move towards $1,262."
Gold was down 0.1 percent at $1,282.29 an ounce by 1009 GMT, not far off its weakest since Feb. 11 at $1,277.10 on Tuesday.
U.S. gold futures fell by the same margin to $1,283.20 an ounce.
Global stocks were back on the front foot on Thursday, as upbeat earnings from the tech sector helped shake off some of the jitters that have hit the sector in recent weeks. The dollar was steady against a basket of currencies.
Over the past few weeks, gold's main prop has been its role as an insurance against market risks raised by escalating tensions between Russia and the West over Ukraine.
Russian Foreign Minister Sergei Lavrov accused the United States of being behind the political upheaval in Ukraine and said Moscow would respond if its interests came under attack.
However, it is U.S. economic health that will continue to be the main driver of gold prices in the near term, while a lack of physical buying was likely to trim gains, dealers said.
Investment demand remains weak with the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, seeing sharp outflows in recent days.
Last week, the fund's outflows totalled 9.3 tonnes, erasing all the gains made in the year.
"It seems that $1,300 is not easy to break through for the time being. There's not much buying from China. People are just waiting for the price to fall," said a physical dealer in Hong Kong.
"Premiums for gold are mostly unchanged at $1, although there are also people who offer it at 80 cents premiums, depending on the brand."
Among other precious metals, silver was down 0.6 percent at $19.28 an ounce, while spot platinum was unchanged at $1,396.74 an ounce and spot palladium dropped 0.2 percent at $781.80 an ounce.
