London: Gold held near a three-week high as traders scaled back bets on a US interest-rate increase after data hinted at a weaker economy. The metal has set a series of lower highs, seen as a sign that prices may fall by analysts who look to chart patterns for clues.

Bullion for immediate delivery advanced 0.2 per cent to $1,347.39 (Dh4,944.92) an ounce by 12:07pm in London, according to Bloomberg generic pricing. The metal touched $1,352.74 on Wednesday, its highest intraday level since August 19. Weaker US data, including a drop in a services gauge on Tuesday to a six-year low, is dimming the outlook for a rate increase.

Bullion’s 25 per cent first-half rally has petered out, with the metal unable to break above a two-year high set in early July in the wake of Britain’s decision to leave the European Union. Attention has since turned to US monetary policy, with the ebb and flow of sentiment on the date of an interest-rate increase the driving factor for the metal.

“Gold has struggled to get through the $1,350 to $1,380 area, with consecutively lower highs,” Georgette Boele, a currency and commodity strategist at ABN Amro Bank NV in Amsterdam, said by email. “Investors are taking profit every time we approach these levels, so it will probably take a bit of unexpected news to move us above.”

Jobless claims

Investor’s attention is now trained on the European Central Bank, which is forecast to maintain its unprecedented stimulus measures as President Mario Draghi lays out fresh growth and inflation projections for the euro area. Weekly jobless claims in the US follow later.

“Eyes would also be on tonight’s initial jobless claims, where any disappointment above the 265,000 mark should further fuel calls for the Fed to keep its rates on hold in its upcoming September meeting,” Barnabas Gan, an economist at Oversea-Chinese Banking Corp, said by email. “Gold should go higher given tapering expectations of a Fed rate hike in both September and December.”

Odds for tightening in September dropped to 22 per cent as of Wednesday, from 34 per cent at the start of the month, while the probability of a move in December is at 52 per cent, according to federal-funds futures contracts.

The US economy grew at a modest pace in July and August as a strong labour market failed to put much upward pressure on wages and prices, according to the Fed’s latest Beige Book release published Wednesday.