Gold heads for longest monthly drop in 16 years
Singapore, February 28, 2013
Gold inched up on Thursday, but was headed for its longest stretch of monthly declines in more than 16 years as an improving economic outlook dimmed its safe-haven appeal.
Gold sank nearly 1 percent in the previous session, wiping out gains on Tuesday that were fuelled by Fed Chairman Ben Bernanke's reassurance of the bank's easing measures, even as Bernanke continued to defend the programme in a second day of congressional testimony.
"The market was having a bit of a Bernanke hangover from the night before, realising that it might have overreacted," said a Singapore-based trader.
U.S. economic data remained largely upbeat, with planned business spending recording its largest increase in more than a year in January and contracts to buy previously owned homes approaching a near three-year peak.
"We still see a trend of economic recovery," said Chen Min, an analyst at Jinrui Futures in the southern Chinese city of Shenzhen.
"Gold's sentiment remains fickle, as it lacks a significant catalyst to propel the rally into the thirteenth year and people are more sensitive to even slightly bearish signs."
An exodus from the SPDR Gold Trust, the world's biggest gold-backed exchange-traded fund, continued for a seventh consecutive session, marking the longest stretch of outflow in the fund's history.
Spot gold traded little changed at $1,597.56 an ounceby 0354 GMT, on course for a monthly decline of 4 percent. It has been in the red for five straight months, the longest such losing streak since late 1996 to early 1997.
U.S. gold inched up $1.40 to $1,597.10.
Technical analysis suggested spot gold could retreat to $1,579 an ounce during the day, said Reuters market analyst Wang Tao.
Signs of easing fears over Italy also weighed on gold sentiment, after the country's first bond auction since the inconclusive election met with solid demand.
The US is approaching the "sequester" on Friday, or automatic spending cuts in government programmes, barring a last-minute budget deal by the lawmakers.
The fiscal crisis could threaten the fledgling recovery of the world's top economy, which might argue for further monetary easing and higher interest in safe havens such as gold, analysts have said. – Reuters