* Gold inches up after 1 pct fall overnight
* On track for 3 pct weekly decline
* Physical demand could pick up with price drop - analyst
By A. Ananthalakshmi
SINGAPORE, March 28 Gold recovered slightly on
Friday after sharp overnight declines but the metal remained
near six-week lows and on track for a second straight weekly
decline, as improving sentiment over the U.S. economic outlook
dented its safe-haven appeal.
Bullion has dropped about $100 an ounce from a six-month
high in the last nine trading sessions on strong U.S. economic
data and comments by Federal Reserve chairman Janet Yellen that
interest rates could rise in the first half of 2015.
"While technical movements may dictate gold's near-term
direction, $1,300 is an important threshold for price sensitive
bullion buyers, notably emerging markets buyers," HSBC analysts
said in a note.
The sharp drop in prices in the last few days could bring
physical buyers back into the market and help gold prices
consolidate, they said.
Spot gold was up 0.5 percent at $1,297 an ounce by
0739 GMT. On Thursday, gold fell to $1,288.80 - its lowest since
Feb. 13 - before closing down 1 percent.
It is down about 3 percent for the week after a rapid rise
early in the year as global equities fell and severe weather
threatened to hurt U.S. economic growth
Phillip Futures analyst Joyce Liu said prices may
consolidate above $1,274.
"This is a key technical level that offered strong
resistance when prices were on the ascent in January, and may
prove to be a level of strong support now as prices decline,"
Data on Thursday showed the U.S. economy grew a bit faster
than previously estimated in the fourth quarter and new claims
for jobless aid dropped to a near four-month low last
SPDR Gold Trust, the world's biggest gold-backed
exchange traded fund and a good measure of investor confidence,
saw two straight days of outflows this week through Wednesday.
In the physical markets, traders said demand could pick up
given the recent sharp fall in prices but remained cautious as
consumers seemed uncertain about the price direction from
Prices in the world's biggest consumer, China, remained at a
discount to spot prices - indicating lack of fresh demand.
Among other precious metals, palladium gained nearly
1 percent on Friday after falling about 3 percent in the
previous session. The metal has recently been supported by
worries over supply from Russia and South Africa - the top two
PRICES AT 0739 GMT
Metal Last Change Pct chg
Spot gold 1297 6.36 0.49
Spot silver 19.8 0.14 0.71
Spot platinum 1402.25 10.45 0.75
Spot palladium 757.5 4.5 0.6
Comex gold 1297.5 2.8 0.22
Comex silver 19.85 0.142 0.72
COMEX gold and silver contracts show the
most active months
(Reporting by A. Ananthalakshmi; Editing by Shri Navaratnam and