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Gold slips as Asian stocks climb, but holds above $1,300

Source : REUTERS
Last Updated: Thu, Jun 26, 2014 09:41 hrs
Gold

Gold slipped on Thursday as stronger equities dented the metal's safe-haven appeal and investors largely shrugged off weak U.S. economic growth numbers in favour of more recent data.

The U.S. economy contracted at a much steeper pace in the first quarter than previously estimated, turning in one of its worst-ever non-recession performances, but growth already appears to have rebounded strongly.

Spot gold fell 0.2 percent to $1,316.66 an ounce by 0252 GMT, after rising 0.1 percent in the previous session. The metal was still holding near two-month highs supported by violence in Iraq.

"A much firmer tone in gold would have been the logical reaction, as in theory, weaker growth should trigger talk of yet more quantitative easing," said Edward Meir, analyst at INTL FCStone, referring to the U.S. Federal Reserve's stimulus measures.

"But the fact that this did not happen suggests that investors are figuring that the first quarter is ancient history by now, with their focus now being on the second quarter and the balance of the year," Meir said.

The metal was earlier supported by a weaker dollar, which was languishing near one-month lows against a basket of major currencies early on Thursday.

Other traders said the metal will continue to see choppy trading.

"While geopolitical tensions are keeping gold above $1,300, physical demand and investor interest are muted," said one trader in Hong Kong, adding that any escalation of tensions in Iraq and economic data will be the key factors to watch.

Militants attacked one of Iraq's largest air bases and seized control of several small oilfields on Wednesday as U.S. special forces troops and intelligence analysts arrived to help Iraqi security forces counter a mounting Sunni insurgency.

Gold is seen as an investment-hedge during periods of financial and geopolitical uncertainty.

Among other precious metals, platinum group metals were steady after tens of thousands of South African platinum miners returned to work on Wednesday after wage deals ended the longest and most damaging strike in the country's history.

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