August 23, 2010 / 12:59 AM / 7 years ago

Gold ends flat as key U.S. economic data in focus

<p>A saleswoman stands behind the showcased gold necklaces at a jewellery showroom in Agartala, capital of India's northeastern state of Tripura, August 18, 2010.Jayanta Dey</p>

NEW YORK/LONDON (Reuters) - Gold was largely flat in quiet trade on Monday, as investors awaited key U.S. housing and GDP data later this week, which could provide support to the metal viewed as a safe haven in times of uncertainties.

A firmer dollar against the euro kept gold from rising further, as new euro zone data added to concerns that economy recovery could be stalling. Crude oil also fell for a fourth day in a row due to economic worries. <FRX/> <O/R>

Last week, the metal had its first three-week rally since June after data showing new claims for U.S. employment benefits unexpectedly climbed to a new high, and after the Federal Reserve downgraded its economic outlook.

"All the signs are that for the U.S. economy, the fast part of the recovery is over, and it is now making modest gains. The gains are simply not enough to reduce unemployment," said Citigroup analyst David Thurtell.

"There are concerns about the flow-on that will have on the equity markets, so that is helping gold," he said. "There are also more signs, perhaps, that the Fed will have to do some more quantitative easing."

Spot gold was at $1,226.50 an ounce at 3:22 p.m. EDT, against $1,226.95 late in New York on Friday. U.S. gold futures for December delivery settled down 30 cents at $1,228.50.

Trading volume in COMEX gold futures was near a one-year low at just 55,000 lots on Monday during the slower summer sessions, preliminary exchange data showed.

Bullion has been on a rising trend on safe-haven demand amid double-dip recession worries since it bottomed in late July. Gold rallied to a 1-1/2 month high at $1,237.15 an ounce last week after a spate of lackluster U.S. data knocked confidence in the economic recovery.

Gold could still face stiff resistance at around $1,238 -- the 76.4 percent Fibonacci retracement level, and technical charts showed daily momentum is turning lower, CitiFX said. (Graphic: link.reuters.com/ges66n)

"While we remain medium-term bullish, we are still not convinced that gold is ready for the next move higher in the near term." CitiFX said.

"We continue to believe that the danger of a correction lower still exists."

The U.S. Commodity Futures Trading Commission's weekly Commitment of Traders report showed noncommercial net long positions in gold futures has climbed in three out of past four weeks. (Graphic: link.reuters.com/cys66n)

A rise in positions held by short-term traders suggested prices could retreat due to profit taking, analysts said.

AWAITING U.S. ECONOMIC DATA

Investment demand for gold has increased in recent sessions, with holdings of the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, rising by nearly 13 metric tons last week, its biggest one-week climb since early June.

This week, possible disappointment from the U.S. economic data, including the existing home sales, weekly initial jobless claims and GDP data, could boost buying of gold as an alternative investment, said Zachary Oxman, managing director of TrendMax Futures.

Gold has become increasingly expensive compared with the industrial precious metals in recent weeks as concerns over the outlook for economic growth have increased. The ratio of gold to platinum and silver has risen to its highest since early June. (Graphic: r.reuters.com/rew56n)

Silver was at $18.00 an ounce against $17.98 on Friday. Platinum was at $1,507.50 an ounce against $1,506.50 and palladium at $482 against $473.

Prices at 3:32 p.m. EDT

LAST/ NET PCT YTD

CLOSE CHG CHG CHG US gold 1228.50 -0.30 0.0% 12.1% US silver 17.992 0.001 0.0% 6.8% US platinum 1508.60 -5.30 -0.4% 2.6% US palladium 483.70 7.50 1.6% 18.3%

Gold 1226.15 -0.80 -0.1% 11.8% Silver 17.99 0.01 0.1% 6.8% Platinum 1507.50 1.00 0.1% 2.9% Palladium 482.00 9.00 1.9% 18.9%

Gold Fix 1226.00 -1.00 -0.1% 11.1% Silver Fix 17.94 -20.00 -1.1% 5.6% Platinum Fix 1510.00 3.50 0.2% 3.0% Palladium Fix 480.00 4.00 0.8% 19.4%

Additional reporting by Jan Harvey in London; Editing by Marguerita Choy

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