Gold edges up from four-month low on eurozone fears

Bengaluru — Gold prices edged up on Thursday from the near four-month low touched early in the session after data showing eurozone businesses were under pressure brought concerns about global growth back to the fore.

Spot gold was up 0.2% at $1,275.71 an ounce by 9.47am GMT, having fallen to its lowest since December 27 at $1,270.63 earlier in the session. The metal has, so far, lost about 1% in the holiday-shortened week, on track for a fourth straight weekly decline. Most markets are closed for Good Friday on April 19.

Eurozone businesses started this quarter on the back foot, with growth unexpectedly slowing again, surveys showed.

“The figures for the eurozone were mixed. The market clearly does not know what to do next. But the European Central Bank (ECB) is going to be on hold, which is offering some support for gold,” Quantitative Commodity Research analyst Peter Fertig said.

Gold, as a non-yielding asset, tends to suffer when central banks raise interest rates.

“The stock markets are down and that’s compensating a bit in gold,” Fertig added. “Uncertainty about the economic situation is also supporting the gold market a little bit.”

Global shares erased this week’s gains after the weak manufacturing surveys from Asia and Europe stoked fears of a slowdown in global growth. The eurozone numbers come at a time when global markets were slowly recovering from fears of a slowdown after a slew of positive data from China and the US.

Also on investors’ radar will be developments in U.S.-China trade talks. Washington and Beijing have set a tentative timeline for the next round of talks and are aiming to conclude negotiations by early June, according to a Wall Street Journal report on Wednesday.

Market participants will also keep a close eye on US retail sales data later in the day for clues on the country’s economic health.

Meanwhile, holdings of the world’s largest gold-backed exchange-traded fund (ETF), SPDR Gold Trust, stood at 752.86 tonnes on Wednesday, a marginal increase from the previous day but still around their lowest levels since October 27.

“While holdings in SPDR Gold shares have dropped to a six-month low, overall gold holdings in physically backed ETFs have remained relatively consistent, suggesting macro-asset allocators continue to maintain some exposure in the wider risk environment,” BMO Capital Markets said in a research note.

In other metals, silver was unchanged at $15 an ounce and platinum rose 0.2% to $885.15. Palladium slipped 0.6% to $1,392 an ounce, having jumped 3.9% to a two-week high of $1,406.81 in the previous session.

Reuters