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Gold steady on physical buying; decline seen

Singapore, January 6, 2011

Spot gold held steady on  Thursday, supported by bargain hunting on the physical market,  but optimism spurred by strong US private employment data  weighed on sentiment.

Spot gold lost 0.1 percent to $1,375.8 an ounce by  0638 GMT, after falling to a three-week low of $1,363.8 in the  previous session. US gold futures gained 0.2 percent to $1,376.6.

The number of US private-sector jobs surged in December  at a rate three times stronger than forecast, payrolls  processing company ADP Employer Services said on Wednesday.

Private employers added 297,000 jobs last month, the  largest gain on ADP records dating to 2000. The ADP report,  ahead of government employment data due on Friday, added to  growing evidence that recovery in the world's largest economy  is shifting up a gear.

"Recent US data has been very positive, weighing on gold  prices," said Hou Xinqiang, an analyst at Jinrui Futures in  China. "In addition, there hasn't been any new momentum pushing  gold above the record level. If we don't see any drastically  bad news on the macroeconomic front, gold's performance might  be lackluster in the short term."     

Spot gold is expected to zigzag down towards $1,355  per ounce, a Reuters market analyst Wang Tao said, adding  volatility could be low on Thursday and Friday, with a price  band between $1,355 and $1,375, as indicated by a small descending channel.

But the downside was limited by bargain hunting on the  physical market, dealers said. "We see very good physical demand help pushing gold from  below $1,370 to the current level," said a Hong Kong-based  dealer. - Reuters




Tags: Gold | precious metal | US payrolls |

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