SINGAPORE, May 24: Gold rose on Friday and stayed on track for its strongest week in a month after a US Federal Reserve official said there was no rush to end the monetary easing programme that has increased the metal’s appeal as a hedge against inflation.
Gold edged up this week as investors sought its safe-haven status after the dollar and equity markets were hit by factory data from China and the United States that showed the pace of manufacturing had slowed.
Spot gold rose 0.21 percent to $1,393.61 an ounce by 0346 GMT, still not far from two-year lows near $1,321 seen in mid-April. U.S. Gold rose slightly to $1,392.50.
Gold has been hammered this year, losing nearly a fifth of its value, as investors favoured stocks and other risk assets on the back of strong economic data.
‘Gold prices will be stuck in a range for a while, trading below $1,400-$1,410 an ounce,’ said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.
Global financial markets were spooked earlier this week when Fed Chairman Ben Bernanke said the U.S. Central bank could decide to start scaling back on its $85 billion in monthly bond purchases in the next few meetings.
But Bernanke also said the U.S. Economy had to show more signs of progress before the Fed would make that move, and gold has stayed on track for a 2.5 percent gain this week.
St. Louis Fed President James Bullard said on Thursday he did not think the Fed was ‘that close’ to taking any such decision, tempering the concern that the bank would move quickly to end its easy money policy.
‘Despite Bernanke dancing around the question of when the stimulus will be removed, at this stage, the move is more of a matter of when rather than if. When it does occur, it could knock out a key prop from under the gold market going forward,’ said Edward Meir, an analyst with INTL FCStone.
Dealer Leung said Chinese had slowed down their physical buying on Friday as they await data on U.S. Durable goods orders and consumer confidence reports from German and Italy.
Buyers in China had been active earlier this week lured by lower prices, helping to push premiums to record highs in Hong Kong and Singapore.
Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell to fresh four-year lows of 1018.57 tonnes on Thursday.
(AGENCIES)
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