Gold off 2-week high vs dollar
London, May 31, 2013
Gold moved off earlier two-week highs on Friday, as the dollar rose slightly, but was still on track for its second weekly gain after weak US data eased speculation the Federal Reserve could soon scale back monetary easing.
Fears the US central bank could start reining in its $85 billion in monthly asset purchases as early as the summer had sparked a sell-off in gold and a rally in the dollar.
But recent weak GDP and jobs data boosted chances of the Fed continuing its easing policy and keeping interest rates low. Low rates usually encourage investors to put money into non-interest-bearing assets like gold.
Spot gold touched its highest since May 15 at $1,421 an ounce, before retreating to $1,411.91 at 0938 GMT, down 0.1 percent. US gold fell 0.1 percent to $1,410.40 an ounce.
"Gold is reacting to the movements in the dollar and share markets," Commerzbank chief precious metals trader Adrien Biondi said.
The dollar rebounded 0.3 percent from earlier lows, while US 10-year Treasury yields continued to retreat from 13-month highs reached earlier in the week. A fall in returns from US bonds and other markets is seen as a positive sign for gold.
Traders remain however cautious and expect the market to remain firm around current levels before the weekend, with some book squaring possible as the month ends.
"The market remains as a whole short and I suspect there will be some pain out there on a clear break of $1,420-30," MKS Capital senior trader Alex Thorndike said.
"Banks have been suggesting there are some pretty sizeable stops accruing through there," he added. "A break of $1,430 could see a sharp rise towards the next resistance of $1,450." - Reuters
