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Gold rises on weaker dollar after 3-day fall

Singapore, May 14, 2013

Gold rose on Tuesday for the first time in four sessions, aided by a softer dollar, but persistent outflows from exchange-traded funds reflected investors' waning interest in the metal as a safe haven.

A surprise rise in US retail sales in April strengthened the view that the US economy remains resilient, damping speculation the Federal Reserve will extend its bullion-friendly bond-buying programme.

Gold hit a high of $1,444.96 an ounce and stood at $1,440.66 by 0419 GMT, up $10.61. The precious metal, which has fallen about 14 per cent this year, slipped more than 1 per cent to a low around $1,425 on Monday, near Friday's two-week trough.

"Stocks are looking more attractive for investors. Gold will continue in the downward trend. It might test $1,400," said Brian Lan, managing director of GoldSilver Central in Singapore.

"I don't see any data that could possibly push gold prices up."

Gold has recovered about $120 since a sell-off in April dragged prices to two-year lows, but it is still well below last month's peak of around $1,600, as investors shifted into equities and cut exposure to bullion.

The holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, stood at 33.811 million ounces, just off their lowest level since March 2009.

US gold futures for June delivery were at $1,439.60 an ounce, up $5.30.   

Shares in Asia snapped a two-day losing streak and rose on Tuesday as a surprising increase in US retail sales boosted sentiment, but the dollar took a breather after gaining broadly on growing optimism over a recovery in the world's largest economy.

Cash and US gold futures sank to around $1,321 on April 16 after worries about central bank sales and a drop below $1,500 led to a sell-off that stunned ardent gold investors and bulls.

The fall spurred a surge in physical buying in Asia and elsewhere, helping to pluck prices off lows, but physical demand for some gold products began to subside.

"While gold coin sales have been brisk, undoubtedly helping the recent recovery, we have to suspect that the 'bargain-buying' off the lows has decelerated somewhat after the initial spurt," said Edward Meir, a metals analyst at futures brokerage INTL FCStone.

"And we suspect it will continue to do so, particularly if prices start to wobble once again."

Silver and platinum tracked gold higher, but palladium eased.

China's demand for platinum jewellery jumped 16 per cent to near record levels in 2012 as lower prices drew buyers, Johnson Matthey said. - Reuters




Tags: Gold | Singapore |

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