Gold Settles Down at $1,453 Per Ounce

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Gold settled down on Friday as investors booked profits after a 1 percent rally. Bullion has now recovered about 75 percent of massive losses incurred between April 12 and 16.

Sentiment, though buoyed, was still on an unsure footing with investors in exchange-traded funds heading for the exit, highlighted by further fund outflows on potential central bank sales and uncertainty over U.S. monetary stimulus.

Gold hit its highest since April 15 at $1,484.81 an ounce, dipping to $1,456 per ounce, down 0.7 percent.

(Read More: Has Gold Found Its Floor?)

U.S. gold futures rose as high as $1,484.80 an ounce before turned lower to settle at $1,453.60, down $8.20 per ounce.

(Read More: True Floor for Gold? How About $1,200?)

"There has been some profit-taking, although ... poor (U.S.) Q1 GDP data missed the three percent target and that is encouraging for gold because the whole sell-off in the metal was linked to perceptions that the U.S. economy was getting stronger and stronger," Societe Generale analyst Robin Bhar said.

U.S. first-quarter growth expanded at a 2.5 percent annual rate, missing economists' expectations for 3 percent. Meanwhile, a separate report on consumer sentiment showed a drop from the previous month.

The data may fuel speculation on the possibility of more Federal Reserve measures to boost growth, or at least keep its current stimulus plans in place.

Accommodative monetary policy favours gold as low interest rates encourage investors to put money into non-interest-bearing assets.

Strong Physical Demand

Physical buying persisted in Asia, with premiums for gold bars in Hong Kong jumping to their highest level since October 2011 this week, at up to $3 an ounce to spot London prices.

Premiums in Singapore stayed at their highest since October 2008 at $3 an ounce to the spot London prices on demand from Indonesia, Thailand and India.

"The market rallied quite strongly yesterday and we thought we would see some easiness in the physical market, which hasn't been the case and there still seems to be some tightness, which puts the $1,500 level on the cards," MKS head of trading Afshin Nabavi said.

Nabavi added that there hadn't been the same kind of shortage for prompt delivery since 1998, when India officially opened up imports.

But while physical demand has been strong, China, the second-largest gold consumer after India, will be on holiday for three days next week for the May Day break, possibly removing significant support from the market, traders said.

A daily drop in exchange-traded funds' holdings suggested that gold investors were still licking their wounds after bullion's historic fall last week.

Holdings of the largest gold-backed exchange-traded fund, the SPDR Gold Trust, dipped 0.25 percent to 1,090.27 tonnes on Thursday, from 1,092.98 on Wednesday. Holdings are at their lowest level since September 2009.

"Heavy disinvestment from ETF investors is being offset by strong physical demand in key markets such as India and China, but neither of these is likely to continue indefinitely, and which runs its course first could determine whether the (gold) price moves $100/oz higher or lower," Macquarie said in a note.

Silver fell 1.6 percent to nearly $24 an ounce, having earlier risen to a 10-day high of $24.82. It is set for its highest weekly gain since January.

The gold/silver ratio remained high on Friday with an ounce of gold buying about 60 ounces of silver, compared with less than 32 ounces in April 2011.

Platinum gained 0.5 percent to nearly $1,474 an ounce, while palladium was down 0.3 percent at $678 an ounce.