Picture: REUTERS
Picture: REUTERS

Bengaluru — Gold held steady on Friday, on course for its second straight weekly gain, with weak economic data from the US compounding worries about a global slowdown while investors await concrete signals on US-China trade talks.

Spot gold was little changed at $1,322.06 an ounce as of 10.38am GMT. The metal was headed for a second straight weekly rise, up almost 0.1% this week, having scaled a 10-month peak at $1,346.73 on Wednesday. US gold futures were up 0.1% at $1,329.1 an ounce.

“The market is expecting the dollar to weaken. We expect growth in the US to slow,” said Natixis analyst Bernard Dahdah.

The dollar index was little changed against six major currencies, but was set for its biggest weekly fall in a month. The dollar, which is increasingly sought as a refuge for investors against the backdrop of the US-China trade spat, has been pressured recently on signs of a breakthrough in talks.

Minutes of the US Federal Reserve’s latest meeting painted a slightly less dovish picture than expected on the future of interest rates, weighing on gold over the past two sessions.  Higher interest rates reduce investor interest in non-yielding bullion.

However, data showing that new orders for key US-made capital goods unexpectedly fell in December on declining demand for machinery and primary metals, revived some market expectations that the Fed would halt its rate-hiking cycle this year.

This added to jitters over a slowdown elsewhere, including Europe and China, which analysts said has bolstered appeal for gold, considered a safe store of value during economic and political uncertainty.

“The main target [for gold] is still the technically important area between $1,350 and $1,360 above which would be a one-year high,” said Ronan Manly, a precious metals analyst at BullionStar Singapore.

Investor attention has turned to the culmination of trade talks between US and Chinese negotiators, which has shown signs of promise of late. However, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund (ETF), dropped 0.63% to 789.51 tonnes on Thursday.

The slight pullback in ETF holdings should not be read as a shift in stance by gold investors as the levels are still close to the highs recorded at the beginning of this year, Natixis’s Dahdah said.

In other metals, palladium gained 1% to $1,483.98 an ounce, having passed the psychologically significant $1,500 level for the first time on February 20. The automotive catalyst metal is on track for a third straight week of gains, up about 3.6%.

Platinum rose 0.7% to $825.10, and is set for its best week since early January. Silver was up 0.2% to $15.85, poised to snap two consecutive weekly losses.

Reuters