SINGAPORE, Aug 9: Gold rose for a third session on Friday, eking out a small gain for the week and pulling further away from a three-week trough, as a softer US dollar offset fears of a tapering in stimulus measures next month.
With the dollar at seven-week lows, gold recovered about $45 an ounce from the low seen mid-week. It was also supported by strong data from China that suggested economic optimism and news of falling mine output in South Africa.
‘The weakness in the dollar is causing some short-covering in gold,’ said Ronald Leung at dealer and refiner Lee Cheong Gold Dealers in Hong Kong.
The dollar was trading near seven-week lows on Friday after having fallen for five straight sessions, as risk-seeking investors abandoned the greenback after surprisingly strong trade figures from China.
‘We are expecting more profit-taking if we trade above $1,320-$1,322,’ said a precious metals trader in Singapore. ‘The magic number from here to cross and hold above is $1,331.’
Spot gold rose 0.2 percent to $1,314.11 an ounce by 0304 GMT. Earlier in the week, it fell to a three-week low of $1,272.64 on fears that the U.S. Federal Reserve will begin scaling back its $85 billion monthly bond purchases from next month.
The metal, which has gained 0.2 percent this week, has lost a fourth of its value this year as investors exit gold-backed exchange traded funds, seeing an end to easy central bank money.
The U.S. Central bank is likely to begin cutting back on its massive bond-buying program next month, as long as economic data continues to improve, a top Fed official known for his opposition to the program said on Thursday.
A gauge of the trend in layoffs of American workers fell last week to its lowest since before the 2007-09 recession, a hopeful sign for the U.S. Economy and supporting the case for a tapering.
SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said it saw outflows of 1.2 tonnes on Thursday bringing total holdings to 909.33 tonnes.
Outflows from gold ETFs this year have totalled $30.9 billion as of July, Blackrock said in a report earlier this week.
(AGENCIES)
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