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Gold edges down, market awaits key US data

Spot gold eased to $665.30/665.90 an ounce at 1009 GMT from $666.50/667.10 late in New York on Wednesday, when it rose $3 as oil gained and the dollar dipped against the euro.

Gold has been hovering in a narrow range below $670 this week as concerns about the health of the global economy prevented players from betting heavily in any one direction.

“Most of the clients I speak to at the moment are interested in minimising positions, minimising risk and are only trading when they have to,” said John Reade, head of metals strategy at UBS Investment Bank.

“I think this is a good price to be long gold, but I am not quite sure what’s going to make it move up in the short term. We should start to see more demand coming into the market soon on the gold side. If that starts to come through that might encourage people to add to some long positions.”

Gold, traditionally seen as a safe haven in times of turmoil, has been tracking the stock market as fears about a global credit squeeze linger.

US economic growth data on Thursday and inflation figures on Friday could give investors a clear picture on how the recent market turbulence in the wake of chaos in the US subprime mortgage market might have affected the overall economy.

“Investors are still nervous about the fallout of the subprime mortgage crisis and credit crunch and sentiment is bearish. Thus, any negative news could send stock prices lower and this would weigh on gold,” Dresdner Kleinwort Investment Bank said in a research note.

European stocks trimmed gains in mid-morning trade on Thursday as US index futures weakened. At 0957 GMT, the FTSEurofirst 300 index index of top European shares was up 0.45 percent at 1,505.20 points, after earlier having been up as much as 1.1 percent.

Index futures for the Dow Jones industrial average and the S&P 500 were down by around 0.5 percent, while futures for the Nasdaq Composite were down 0.2 percent.

Market players are also waiting for US Federal Reserve Chairman Ben Bernanke’s speech on Friday to hear how he refers to the volatility in financial markets.

Speculation is rising that the Fed might cut the benchmark federal funds rate from 5.25 percent at its next meeting in September, although the central bank maintained its focus on inflationary risks in its August minutes.

Lower rates typically pressure the dollar and benefit gold.

In other metals, platinum fell to $1,260/1,265 an ounce from $1,265.10/1,272.10 in New York, but palladium and silver were unchanged at $328/333 and $11.84/11.89 an ounce respectively.

In industry news, Impala Platinum Holdings Ltd, the world’s second biggest platinum producer, said its key mine operation was recovering after recent problems