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Gold ekes out gains before US, euro zone data

SINGAPORE - Gold inched up on Tuesday, after dropping in the previous session, as investors waited to see if data from Europe and the United States would indicate more weakness in the global economy and prompt central banks to take stimulus measures.

Further monetary easing, hopes for which have risen after recent weak data from China and Japan, would boost inflation outlook and drive investors to bullion that is traditionally seen as a good hedge against rising prices.

Spot gold edged up 0.2 percent to $1,612.25 an ounce by 0319 GMT, after losing 0.6 percent in the previous session.

“Gold is likely to remain in the range of $1,600 and $1,630 an ounce while people wait for central bank actions,” said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong, adding that buying interest from Shanghai ebbed after prices failed to push through the $1,625 level over the past two days.

Trading volumes on the popular gold spot deferred contract on the Shanghai Gold Exchange was at 9,818 kilograms on Monday, with the average daily volume last week at 10,442 kilogram — down more than a third from last month. Technical analysis suggests that spot gold will remain neutral in the range of $1,605.20 and $1,627 during the day, Reuters market analyst Wang Tao said.

US gold futures contract for December delivery gained 0.2 percent to $1,615.20.

Market participants will take their next trading cue from the euro zone’s second quarter gross domestic product, which is expected to contract, and July US retail sales and consumer prices due later in the day.

Investors remain jittery over the euro zone debt crisis. Short-term Spanish government bond yields rose as investors reassessed the likelihood of ECB resuming its bond-buying programme, while Italy’s public debt hit a record high of almost 2 trillion euros in June.

The inverse correlation between the dollar and gold has weakened since earlier this month.

The correlation reading stood at -0.55, compared to -0.76 on Aug. 2. A reading of -1 suggest a perfect inverse correlation, in which one asset rises and the other declines.

Spot platinum traded up 0.6 percent to $1,388.75.

The metal, mainly used to produce jewellery and autocatalyst, dropped to $1,377.49 an ounce in the previous session, despite a fresh outbreak of violence at a South African mine operated by the world’s No.3 platinum producer Lonmin earlier in the week.