Gold up on lower shares, but strong dollar weighs
Frankfurt (Mar 4) Gold rose slightly above $1,200 an ounce on Wednesday, following two straight sessions of losses, helped by lower European shares but a stronger dollar ahead of major U.S. economic data weighed.
Spot gold was up 0.1 percent at $1,204.80 an ounce by 1100 GMT. The metal had fallen to a one-week low of $1,194.90 on Tuesday, dented by an 11-year high of the dollar and expectations of a U.S. interest rate hike.
U.S. gold for April delivery was unchanged at $1,203.90 an ounce.
"Gold will eventually break lower but as long as we have no new drivers, there are a lot of support levels below $1,200," ABN Amro analyst Georgette Boele said.
"We have quite an event-heavy end of the week, with the U.S. payrolls data on Friday and the ECB meeting tomorrow, so we are unlikely to see much positioning ahead."
The dollar hit its highest since September 2003 against a basket of leading currencies, bolstered by strong U.S. government bond yields this week.
A stronger U.S. currency makes dollar-denominated gold more expensive for holders of other currencies, while the rise in returns from U.S. bonds is negative for the metal, which pays no interest.
The bullion market was closely following U.S. data to gauge when the Federal Reserve might raise rates. A U.S. Institute for Supply Management services report was due later in the day, ahead of the February nonfarm payrolls report on Friday.
Expectations of robust U.S. economic data and higher U.S. interest rates, coupled with investor outflows from bullion funds, are seen as the biggest drawbacks for non-interest-bearing gold.
"In the short term, the mood is still bearish though we might trade in a tight range until the jobs data on Friday," said a trader in Hong Kong.
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"Exchange-traded funds are seeing some big outflows, so that could also add to the pressure if U.S. data is better than expected," he said.
Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.35 percent to 760.80 tonnes on Tuesday. That followed a near-8-tonne fall on Monday, the biggest outflow this year.
Traders were also keeping an eye on the euro, which has been subdued over the past few sessions ahead of a European Central Bank policy meeting on Thursday and the implementation of its government bond buying programme due to start this month.
Spot silver rose 0.4 percent to $16.30 an ounce, while palladium dropped 0.7 percent to $820.85 an ounce and platinum edged 0.3 percent lower to $1,175.24 an ounce.
Source: CNBC
