Gold steady ahead of U.S. data

A fresh batch of U.S. economic data, including inflation and retail sales, is due later in the day, after worse-than-expected weekly jobless claims numbers on Thursday helped propel gold to a new record high of $1,387.10. The Federal Reserve Chairman Ben Bernanke is also scheduled to speak on the monetary policy later in the day. "There are a few things tonight the market would want its teeth stuck into. They obviously help colour the picture and clarify whether or not the Fed would come forward with QE2 (a second round of quantitative monetary easing), and if it does, by how much," said Darren Heathcote, head of trading at Investec Australia. Spot gold XAU= gained 0.2 percent to $1,379.25 an ounce by 0321 GMT, on course for a 2.5 percent gain from a week earlier and a fifth consecutive week of gains. Keeping prices in check, the dollar edged higher on Friday, pulling away from a 10-month low hit against a basket of currencies the previous day as investors trimmed short positions in the greenback following its recent slide. Gold is likely to retrace to $1,365 an ounce before moving higher towards the target of $1,404 early next week, according to Wang Tao, a Reuters market analyst.
The physical gold market saw thin trade in early Asian hours, as traders moved to the sidelines after prices kept breaking records. "All are hiding. Jewellers are not selling much. People are not very confident in the dollar, and are looking at $1,400 level for gold," said a Singapore-based dealer. "We are seeing some buying from speculators, but not users. Even bullion traders are hiding." Purchases from China has kept premium for gold bars steady at 70 cents to spot London prices in Hong Kong, as Chinese investors, who are put off by volatile stock market and the government's move to curb speculation on property, are lured to gold. Holdings in the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, gained 1.5 percent from the previous day to 1,304.342 tonnes, regaining nearly all the outflow from the fund this month. "Gold has had a very strong rise, which obviously is encouraging to people to get on board. People are happy to stay invested and to go even longer," said Heathcote.