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Gold ends up Friday after earlier sell-off

Better US equities performance dents safe-haven appeal

Gulf News

New York: Gold edged up on Friday, but notched a second consecutive weekly loss, as a better US economic outlook and indications the Federal Reserve may end its stimulus program prompted investors to buy riskier assets such as equities.

With a lack of key US economic data on Friday, bullion investors continued to digested the minutes from the Fed’s Open Market Committee (FOMC) meeting in January that suggested stimulus measures may end earlier than first thought.

Improving global market confidence and a Wall Street rally also hit gold’s traditional safe-haven appeal.

“A lot of money is rotating out of gold and into the equities,” said Zachary Oxman, portfolio manager of TrendMax Futures.

Friday’s CFTC Commitments of Traders showed managed money cut their gold futures and options net length to their lowest since November 2008, a sign that some heavy-weight investors may add positions again, dealers said.

Spot gold was up 0.3 per cent to $1,579.91 an ounce by 4:26pm EST (2126 GMT), posting a weekly decline of nearly 2 per cent.

US gold futures for April delivery settled down $5.80 at $1,572.80, with trading volume about 30 per cent below its 250-day average, preliminary Reuters data showed.

US benchmark index S&P 500 was up 6 per cent year to date and managed to hold above 1,500 points despite ending the week slightly down.

Confidence in gold, however, was fragile after the metal fell to a seven-month low of $1,554.49 Thursday a day after the FOMC minutes and rumours of forced liquidation by a troubled commodity fund earlier in the week.

Gold looked vulnerable on technical charts after it formed a bearish formation earlier in the week known as a “death cross,” when its 50-day moving average broke below its 200-day moving average.

ETF holdings, US spending cuts eyed

Investors continued to bail out of SPDR Gold Trust last week. The world’s largest gold-backed, exchange-traded fund posted its biggest weekly outflow since August 2011.

The strength of exchange-traded products will remain an essential element to gold prices, said Suki Cooper, precious metals strategist at Barclays Capital.

Cooper said that bullion investors will also take trading cues from US debt-related news. Massive across-the-board US federal spending cuts are set to kick in on March 1 if policymakers fail to agree on an alternative option.

Among other precious metals, silver was up 0.2 per cent to $28.70 an ounce.

Platinum group metals also ended sharply off Thursday’s lows.

Platinum fell 0.5 per cent to $1,602.75 an ounce, after prices fell to a five-week low of $1,593.45 in the previous session. Palladium rose 0.9 per cent at $735.22 an ounce, having fallen to a one-month low of $707.22 on Thursday.