Gold near 3-month high on lower dollar ahead of US data

London: Gold hovered below a three-month high on Thursday, struggling to break above $1,300 (Dh4,771) as investor caution ahead of a series of US economic figures offset support from a sharply lower dollar and weaker equity markets.

Spot gold was up 0.1 per cent at $1,291.61 an ounce by 1101 GMT, having hit a three-month high of $1,295.91 on Wednesday.

Traders said there was strong technical resistance at the $1,300 level, last seen on November 8.

US gold futures for February delivery were down 0.3 per cent at $1,291.80 an ounce.

“The gold market is still holding quite well but is having some difficulties to test the $1,300 psychological barrier as traders are digesting the gains made earlier in the week,” Quantitative Commodity Research owner Peter Fertig said.

“That level could be breached as long as the environment for the metal remains positive, with some uncertainty in the equity markets and a lower dollar ahead of today’s data.”

The dollar fell 0.5 per cent against a basket of major currencies, while a rally in global shares ended after a week of gains on relief over the continuity in US Federal Reserve policy, hints that the European Central Bank could provide more support in the euro zone and an easing of pressure on emerging markets.

Usually, gold holds an inverse correlation with the dollar, with a weaker US currency making the metal cheaper and increasing demand. Meanwhile, investor risk aversion tends to increase interest in gold, often regarded as a safe haven.

Jobless claims

But at times over the past few sessions the metal has moved in the same direction as equities.

The market awaited US jobless claims and January US retail sales data, due for release at 1330 GMT, for further direction on the dollar and gold.

Recent US data, including two straight months of weak jobs growth, have raised questions over whether the world’s biggest economy can sustain the strength it showed in the second half of last year and made some investors hope the Fed would take a slower approach to tapering its monthly bond purchases.

“Gold may need a compelling reason to hold onto gains over $1,300 lest profit taking chips away at gains,” HSBC said in a note.

Higher gold prices over the past few sessions have curtailed physical buying from China, the world’s biggest gold consumer, after trading volumes hit their highest since May at the start of the week.

Premiums for 99.99 per cent purity gold fell to $5 on Thursday from $7 in the previous session.

Silver was unchanged at $20.19 an ounce.

Platinum was trading down 0.7 per cent at $1,394.00 an ounce, while palladium lost 0.1 per cent to $723.75 an ounce.