Gold ticks up to near 1-week high,but investors still cautious

Gold rose 2.72 an ounce to 1,427.86 by 0317 GMT,well below a lifetime high of around 1,920 in 2011. Prices sank to around 1,321 on April 16,its lowest in more than 2 years,and gold has dropped around 15 percent this year.

8220;From a technical stand point,there are still downside risks to gold prices. I suspect we haven8217;t really seen the market turning around to be bullish in gold prices just yet,8221; said CIMB regional economist Song Seng Wun.

U.S. gold futures for June delivery stood at 1,427.50 an ounce,up 6.30.

Gold has been caught in a tug-of-war between physical buyers seeking bargains and wary investors cutting exposure to the precious metal on nagging worries about central bank sales and prospects of easing inflation.

Physical buying persisted in Asia even though prices rebounded more than 100 from last week8217;s lows,keeping premiums for gold bars at multi-month highs in Singapore and Hong Kong as supply also tightened for coins and other products.

8220;If you want gold real quick,you have to pay big premiums. People are still buying gold,and India is coming in. But Thailand is slow because they are waiting for prices to come off again,8221; said a dealer in Singapore.

India,the world8217;s largest gold consumer,celebrates Akshaya Tritiya,a key gold-buying festival,next month,while the wedding season will continue till early June. Indian parents give gold jewellery to their daughters at weddings as a custom.

ETF OUTFLOWS

Dealers,still puzzled by the steady outflows from gold ETFs,barely reacted to disappointing manufacturing data from China,which suggests the world8217;s second-largest economy faces global headwinds into the second quarter.

Holdings on SPDR Gold Trust,the world8217;s largest gold-backed exchange-traded fund,tumbled to their lowest level since early 2010,which indicated that some investors were shifting their money into equities.

The typically safe-haven precious metal has failed to react to tensions in the Korean peninsula and recent bombings at the Boston Marathon,which killed three people and wounded more than 200.

Gold prices have also come under pressure due to Cyprus8217; plan to sell excess gold reserves to raise around 400 million euros 523 million,which led to speculation other indebted euro zone countries could follow suit.

In other markets,shares and other riskier assets lost ground on Tuesday after a preliminary reading showed manufacturing growth in China slowed in April,highlighting recent market concerns about global growth prospects.