Gold firmed on Friday, extending gains from the previous session as lacklustre US data bolstered hopes that the Federal Reserve's monetary stimulus would stay in place, though prices were headed for a second straight weekly drop.

 

Thursday's data on employment, manufacturing and consumer prices pointed to a still tepid recovery in the US economy and supported the argument for the Fed to maintain its monetary stimulus. 

 

That, combined with bargain hunting especially from Asia, helped lift gold from a seven-month low of $1,554.49 an ounce hit after minutes from the Federal Reserve's latest policy meeting aroused worries that the central bank might stop or slow its bond buying programme. 

 

Spot gold rose nearly half a percent to $1,582.54 an ounce by 0335 GMT, on course for a 1.6 percent weekly decline, its second week in the red. US gold inched up 0.3 percent to $1,582.60.

 

Easy global monetary policy has helped gold rally in the past few years as investors, worried about currency debasement and inflation as a result of money printing by central banks, sought refuge in the precious metal. 

 

"There is a lot of appetite coming in the market to buy the dips," said a Hong Kong-based trader. "After the Fed, people seemed to have a little less conviction that we are going to see indefinite low dollar rates, which have attracted a lot of interest in commodities, especially precious metals. But the macro picture hasn't changed  tremendously and the underlying demand is still strong."

 

Technical analysis suggested spot gold may consolidate in the range of $1,554.49-$1,585 over the next few sessions, as

indicated by its wave pattern and a Fibonacci retracement analysis. - Reuters