Gold price snaps 5-week uptrend on US growth, weak China demand
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Gold price snaps 5-week uptrend on US growth, weak China demand

Last Updated: Saturday, February 01, 2014, 15:58
 
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Gold price snaps 5-week uptrend on US growth, weak China demand
New York/London: Gold fell on Friday, notching its first weekly drop in six due to strong U.S. economic growth, concerns over the U.S. Federal Reserve`s withdrawal of monetary stimulus and a slump in Chinese demand.

Bullion had gained for most of January until this week, underpinned by weakness in global equities on concerns over emerging economies.

But upbeat U.S. growth data reassured investors worried about capital outflows from emerging markets and also validated the Fed`s decision this week to reduce its monthly bond purchases to USD 65 billion from USD 75 billion, as expected.

"You have strength of the dollar against emerging markets currencies, and that`s negative for gold," Quantitative Commodity Research owner Peter Fertig said.
"Fears that it may lead to widespread crisis are currently sending shivers through the stock markets," Fertig added.

Spot gold edged up 16 cents to USD 1,243.36 an ounce by 3:42 p.m. (2042 GMT), paring losses after a 2 percent drop overnight.

U.S. gold futures for April delivery settled down USD 2.70 at USD 1,239.80 an ounce.

The U.S. dollar index was up 0.2 percent on the day, close to a one-week high hit on Thursday. Global shares fell as they struggled to shake off the difficulties that have spread from emerging markets.
The metal posted a 2 percent loss for the week, after five straight weeks of gains. But January`s early strength was enough to push gold to its first monthly rise in five, up more than 3 percent so far.

"The uptrend since late 2013 is on thin ice, and we think if we don`t see a quick snapback, more testing could be in store," said Mark Arbeter, chief technical strategist at S&P Capital IQ in New York.

CHINA HOLIDAY WEIGHS

Gold was also missing the support of physical demand as the world`s number one buyer China has gone into a one-week break.

Among other precious metals, platinum posted a 4 percent drop this week for a second straight weekly fall despite strikes at South African mines that have hit about 40 percent of global output. It was down 0.4 percent at USD 1,372.75 on the day.

Silver was down 3.5 percent for the week for its biggest weekly drop since late November. It was up 0.2 percent on the day at USD 19.16 an ounce. Palladium fell 0.4 percent to USD 701.72 an ounce.



Reuters

First Published: Saturday, February 01, 2014, 06:21


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