Gold posts third straight weekly gain on US economic worries

Last Updated: Sat, Feb 22, 2014 04:26 hrs

Gold rose on Friday, notching its third consecutive weekly gain, as doubts over U.S. economic recovery helped lift bullion's safe-haven appeal.

Bullion was supported after a report showed existing U.S. home sales fell more than expected to an 18-month low in January, the latest metric to indicate softness, though many analysts attributed the weakness to weather instead of worsening fundamentals.

The yellow metal rallied to a 3-1/2 month high earlier this week after a series of disappointing U.S. economic indicators including weak manufacturing data sparked speculation that the Federal Reserve would slow the tapering of its bond purchases.

Miguel Perez-Santalla, vice president at online precious metals market BullionVault, said the metal's ability to hold above key technical support at $1,200 an ounce earlier this year rekindled fund interest to buy gold.

"I believe that the large investment firms have rebalanced their portfolios to include gold. And that is a main factor sustaining gold and may drive prices up into the future," said Perez-Santalla.

Spot gold was up 0.4 percent at $1,327.56 an ounce by 2:33 p.m. EST (1933 GMT).

U.S. COMEX gold futures for April delivery settled up $6.70 an ounce at $1,323.60, with trading volume about 40 percent below its 30-day average, preliminary Reuters data showed.

On Tuesday, the metal hit $1,332.10, its highest since October, lifted by follow-up demand after gold posted a more than 4 percent gain last week.

The world's largest gold-backed exchange-traded fund, SPDR Gold Shares, notched its first weekly outflow in four weeks, of 5.6 tonnes.


Buying in Asia, a major demand center for physical gold, remained light. Dealers saw purchases in the physical market this week, but many jewellers could be waiting for a correction.

"I think (the price) is a little bit too high for Asians to buy gold, because we've been below $1,300 for a long time and people bought a lot," Yuichi Ikemizu, branch manager for Standard Bank in Tokyo, said.

Among other metals, silver gained 0.4 percent to $21.88 an ounce. Palladium was up 1.1 percent at $1,426.24 an ounce, while platinum rose 0.8 percent to $739.50 an ounce.

Dealers said a violent attack in the turbulent, strike-hit platinum mining belt in South Africa lifted prices. A miner was killed by group of men at mine belonging to Anglo American Platinum, police said on Friday.

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