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Gold steady, heads for best week since mid-June

Gold held steady above $1,600 an ounce on Friday, on course for its biggest weekly gain in more than a month, after European Central Bank President Mario Draghi signalled the bank would do whatever was necessary to hold the euro zone together.

Gold in the past few months has moved largely in tandem with the euro and riskier assets, with a relentless debt crisis in the euro zone chipping away at bullion’s safe-haven appeal with investors piling into assets perceived safer, such as the dollar, yen and US Treasuries.

While gold drew support from firm stock markets and a steady euro after Draghi’s pledge, investors were seen turning their focus to US gross domestic product data scheduled for later in the day for fresh trading cues.

US GDP likely grew at a 1.5 percent annual rate in the second quarter, according to a Reuters poll, which would be the slowest pace since the second quarter of 2011. The data may shed light on the stance of the U.S. Federal Reserve on further monetary stimulus.

“If the US GDP number falls short of expectations, it would once again fuel speculations on Fed easing, which would help gold,” said Lynette Tan, an analyst at Phillip Futures in Singapore.

Market participants will also keep an eye on Fed’s policy meeting as well as the key non-farm payrolls data next week. Gold has been seesawing in the range between $1,530 and $1,630, partly due to the Fed’s ambiguity on further easing.

“The market usually gets excited before the non-farm payrolls data with expectations of more quantitative easing, but once people realise it is business as usual, prices will retrace,” a Shanghai-based trader said.

Spot gold was little changed at $1,614.46 an ounce by 0349 GMT, after rising to a three-week high of $1,621.41 an ounce on Thursday. Prices were headed for an almost 2 percent gain this week, the best week in more than a month.

US gold futures contract for August delivery edged down $1.30 to $1,613.80.

As gold staged its longest winning streak since June, physical gold selling accelerated, dealers said.

“We are busy buying scrap from Thailand and Indonesia,” said a Singapore-based dealer, adding that she was asking for a discount of 80 cents to $1.20 an ounce.

Other precious metals also held steady.

Spot silver traded nearly flat at $27.48, after hitting a three-week high of $27.81 in the previous session. It was on course for a 1-percent weekly rise.

Spot platinum inched up 0.3 percent to $1,403.90. Its discount to spot gold increased to $215.59 an ounce in the previous session, its deepest since early December.

In industry news, Barrick Gold Corp and Newmont Mining Corp, the world’s top two gold producers, both reported a sharp decline in their quarterly profits.