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Stimulus fears tarnish gold's weekly value

Friday, 22 Nov 2013 | 12:57 PM ET
AP

Gold edged higher on Friday in response to a weaker dollar but remained on track for its sharpest weekly drop in more than two months as strong U.S. economic data raised uncertainty over the timing of a slowdown in stimulus measures.

Spot gold was last up up 0.2 percent to $1,245 an ounce, after hitting a fresh 4.5-month low of $1,236.29 in the previous session.

U.S. gold futures for December delivery were flat at $1,243 an ounce.

Gold was on track for a 3.4 percent weekly drop, while spot silver also headed for its worst week since mid-September, down 3.7 percent so far.

"The gold price drop seen earlier this week has weakened the technical picture and the next important level to watch is obviously $1,200,'' said Bernard Dahdah, precious metals analyst at Natixis.


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"Evidence that the U.S. economy is improving will lift the dollar, putting further pressure on the gold price in coming weeks.''

A break of the key support area of $1,238-$1,240 an ounce would open up the potential for a broader move towards $1,180, ANZ said.

The dollar fell 0.4 percent against a basket of currencies.

Solid U.S. data over the past few weeks was hurting bullion prices as it could bolster the case for curbing stimulus soon. The Federal Reserve's massive bond-buying program has burnished gold's appeal as a hedge against inflation.

Uncertainty over the timing of this tapering has pushed investors to take money out of gold, causing the metal to drop 25 percent this year.

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