Gold largely flat on U.S. data

NEW YORK (Reuters) - Gold prices were largely flat on Thursday, as the metal continues to be rangebound on the back of disappointing U.S. economic data and a lack of dramatic movements from the outside markets.

A Jordanian goldsmith holds gold bracelets at his shop in Amman June 9, 2010. REUTERS/Muhammad Hamed

Potential surprises from a U.S. consumer inflation report on Friday could provide new catalyst to bullion, which is traditionally used as a hedge against a steady price increase, traders said.

Skepticism about economic recovery among institutional investors such as CALPERS and U.S. banks, however, should push gold prices higher in the long term on safe-haven demand, fund managers said.

Spot gold was at $1,207.80 an ounce at 2:31 p.m. EDT against $1,207.50 late in New York on Wednesday. U.S. gold futures for August delivery settled up $1.30 at $1,208.30.

Bullion gave back gains earlier in the session after reports showed that new U.S. claims for jobless aid tumbled to a near two-year low last week, and a slowdown in manufacturing activity and flat industrial output.

This week, gold has been largely treading water in a $30 range after news that 346 tonnes of gold swap operations conducted by the Bank of International Settlements (BIS) in recent months stirred fears of gold dumping.

Gold rallied to an all-time high of $1,264.90 an ounce on June 21, but the metal has not breached above $1,230 in two weeks since then.

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On Thursday, gold was also pressured by a weaker U.S. stock market due to the anemic economic data, but the metal was supported by a two-month high in the euro against the dollar. .N

Concerns over the economy tend to support gold, but the precious metal will likely remain in a narrow range.

“Bargain hunters want to buy it around $1,200, and (at) $1,217, profit-takers are all lined up,” said Afshin Nabavi, head of trading at MKS Finance.

“Overall a break above $1,225 should trigger more interest from the buyers who are currently on the sidelines. On the downside, $1,200 to $1,185 should bring in some physical-related buying.”

Among other commodities, oil futures fell along with weaker economic sentiment, but the Reuters/Jefferies CRB commodity index .CRB was up 0.8 percent in a mixed market.


Higher allocation by wealthy institutional investors should boost gold prices to new highs, money managers said.

“In the end, profit-sharing plans, 401(k) (retirement plans) and larger institutions like Calpers would be allocating larger amount to gold than they are today,” said Robert Lutts, president of Cabot Money Management, a $500 million wealth manager.

On Thursday, JPMorgan Chase & Co JPM.N said it raised its commodity trading risk in the second quarter, the first time in nine months, but earned less from the sector as prices fell.

Among other precious metals, silver was at $18.26 an ounce against $18.24. Platinum was at $1,522.50 an ounce against $1,519.50, while palladium was at $463.50 against $464.50.

Platinum group metals largely ignored M&A news, as shares in North America's biggest PGM producer Stillwater Mining Co SWC.N rose on market talk that the palladium and platinum miner might be an acquisition target by Russian metals giant Norilsk Nickel.

Additional reporting by Jan Harvey in London; Editing by Lisa Shumaker