Gold price inches up on thin trade as stocks ease

Gold prices edged higher in thin trade on Wednesday as Asian stocks eased.

Written by Reuters | Singapore | Published: July 3, 2013 9:21 am

Gold prices edged higher in thin trade on Wednesday as Asian stocks eased and following comments by two U.S. Federal Reserve officials that the central bank’s economic stimulus could continue for some time.

But investor sentiment remained dour as outflows from exchange-traded funds continued and demand failed to pick up even though prices remain near three-year lows.

Markets are also awaiting U.S. nonfarm jobs data later this week for clues on the strength of the world’s biggest economy and on how quickly the Fed might act to taper its bond buying.

“There was some buying when Shanghai opened but not much after that,” said Yuichi Ikemizu,a branch manager for Standard Bank in Tokyo. “People are adjusting their positions before the U.S. holiday on Thursday.”

US markets are shut on Thursday for the Independence Day holiday.

Spot gold rose 0.54 percent to $1,248.05 an ounce by 0243 GMT,while US gold was little changed at $1,247.30. Spot gold fell 0.9 percent on Tuesday as the dollar strengthened.

Two senior Fed official said on Tuesday that the bank’s monetary policy to support the economy will likely be warranted for some time to come.

Bullion,typically seen as a hedge against inflation,has been under pressure since Fed Chairman Ben Bernanke said last month the U.S. economy was recovering strongly enough for the central bank to begin tapering its stimulus in the next few months,and possibly end the programme in mid-2014.

Gold posted its biggest ever quarterly loss of 23 percent for the April-June period on fears the Fed would end its $85 billion monthly bond purchases.

The U.S. dollar hovered at one-month highs against a basket of major currencies on Wednesday,while Asia shares drooped after a batch of U.S. data reinforced views that the days of easy money from the Federal Reserve are numbered.

Bullion saw some gains earlier this week on short covering and bargain hunting.

“We don’t know if the rebound will last,” said Ronald Leung,chief dealer at Lee Cheong Gold Dealers in Hong Kong. “Investors are more bearish than bullish. ETF outflows is putting pressure on gold prices.”

SPDR Gold Trust,the world’s largest gold-backed exchange-traded fund,said its holdings fell 0.37 percent to 964.69 tonnes on Tuesday,hitting fresh four-year lows.

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