Positive US outlook holds gold steady

Gold was little changed in thin holiday trading amid speculation that the US economic recovery may continue and curb demand for the precious metal as a haven investment. Cash bullion traded at $1,604.20 (Dh5,891) an ounce at 3.23pm Mumbai time. Spot silver was at $29.11 (Dh106.5) per ounce and there were no trades in platinum and palladium. Hong Kong, Singapore and Australia were closed yesterday. Orders for durable goods rose in November by the most in four months, the US Commerce Department said on Friday. A day earlier, Labour Department data showed initial jobless claims fell by 4,000 to 364,000 the previous week, versus a forecast in a Bloomberg survey for an increase to 380,000. Home prices in 20 US cities probably declined at a slower pace and consumer confidence rose to a five-month high, data suggest. \"Investors are quite anxious to see if the US economy is holding up, which will boost the dollar while reducing gold\'s appeal as a safe haven,\" said Wang Xinyou, senior gold analyst at Agricultural Bank of China Ltd. The dollar index has climbed by about 10 per cent from a low in May, Wang said. Gold holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, decreased 4.23 metric tons to 1,254.57 tons as of Friday, according to figures on the company\'s website. \"Gold price has risen 13 per cent this year, quite a considerable gain,\" Wang said. \"Gold will face some selling pressure ahead if the market reaches a consensus that the US economy is gaining strength heading into 2012.\" The precious metal touched a record $1,921.15 on September 6 as investors sought to hedge against market turmoil. Prices have dropped 8 per cent this month, touching $1,560.97 on December 15, the lowest level since September 26. The decline in gold prices is a temporary phase brought on by the reluctance of central banks to ease monetary policies further, Chirag Mehta, a Mumbai-based commodity fund manager at Quantum Asset Management Co., said in a report yesterday. Gold production in China, the world\'s second-largest jewellery market, gained five per cent in the first 10 months of this year to 290.752 tons, according to a statement from the Ministry of Industry and Information Technology.