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Gold ticks up, heads for second straight weekly gain
Gold rose on Friday, heading for a second straight weekly gain, as a cut in interest rates by the European Central Bank and US Federal Reserve's decision to stick to its stimulus programme burnished bullion's appeal as a hedge against inflation.
But gains could still be capped by persistent outflows on exchange-traded funds, with investors unsure if a recent surge in physical demand was sufficient to help gold recover towards $1,500 an ounce -- a level last seen in early April.
Spot gold rose $8.32 an ounce to $1,474.56 by 0624 GMT, well below a lifetime high around $1,920 an ounce hit in September 2011.
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Gold ticks up, heads for second straight weekly gain
"Sentiment is of course not that good because there's still redemption on the ETFs, while the physical market is upbeat.
You can say it's a tug-of-war," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.
A break above a recent high around $1,485 an ounce could help gold revisit $1,500, Leung said.
Cash and US gold futures plunged to around $1,321 on April 16, their lowest in more than two years, after a drop below $1,500 led to a sell-off that stunned investors and prompted them to slash holdings of exchange-traded funds.
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Gold ticks up, heads for second straight weekly gain
SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.56 per cent to 1,069.22 tonnes on Thursday, the lowest since September 2009.
But the drop in prices also spurred purchases of gold bars, coins and nuggets across Asia and in other parts of the world, keeping physical premiums at multi-year highs of around $3 an ounce to the spot London prices.
With prices in Shanghai fetching premiums to cash gold and U.S. bullion futures, jewellers, investors and speculators in the world's No.2 consumer after India stepped up purchases as they returned from a break earlier this week.
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Gold ticks up, heads for second straight weekly gain
US gold for June delivery stood at $1,474.50 an ounce, up $6.90.
"Chart based resistance remains in the $1,475-$1,480 an ounce area, which has held the topside for five sessions.
"Near-term support is at $1,440 an ounce," ANZ said in a report.
Gold should draw support from recent stimulus measures taken by central banks across the world to spur the economy.
The ECB cut its main interest rate by 25 basis points to a record low of 0.50 percent on Thursday, after inflation fell well below the bank's target and weak economic surveys increased doubts about a recovery.
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Gold ticks up, heads for second straight weekly gain
The decision came a day after the US Fed's recommitment to its aggressive stimulus programme, and a month after the Bank of Japan stunned markets by promising to inject about $1.4 trillion into its economy to spur growth.
Investors are now waiting for the key US nonfarm payrolls report for April due on Friday for clues on the longer-term prospects for the Fed's monetary stimulus.
Easy monetary policy extended gold's bull run to a 12th consecutive year last year, as investors bought bullion to hedge against inflation and economic uncertainties.
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Gold ticks up, heads for second straight weekly gain
Other precious metals tracked gold higher, with platinum shrugging off a report by consultancy GFMS that projected a surplus in the global platinum market this year amid weak demand for the autocatalyst metal from carmakers in Europe.
But unrest in the South African mining sector could push prices as high as $1,750 an ounce, GFMS added.
In other markets, Asian shares rose on hopes of a stronger global economic recovery after the ECB cut interest rates and held out the possibility of further easing while the euro remained in the doldrums.
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