Gold snaps 2-day losing streak; U.S. data in focus

Singapore (Mar 4)  Gold edged higher on Wednesday following two days of losses, although caution prevailed as the dollar held near 11-year highs ahead of major U.S. economic data.

Spot gold rose 0.1 percent to $1,204.74 an ounce by 0747 GMT. The metal had fallen to a one-week low of $1,194.90 on Tuesday before paring its losses to close above $1,200.

Despite the gains, the metal could remain under pressure due to expectations of robust U.S. economic data and higher U.S. interest rates, plus investor outflows from bullion funds.

    "In the short term, the mood is still bearish though we

might trade in a tight range until the jobs data on Friday,"

said a trader in Hong Kong. 

    "Exchange-traded funds are seeing some big outflows, so that

could also add to the pressure if U.S. data is better than

expected," he said.

    Gold is likely to trade in a $1,200-$1,220 range leading

into the jobs data, according to MKS Group.

    Holdings in SPDR Gold Trust, the world's largest

gold-backed exchange-traded fund, fell 0.35 percent to 760.80

tonnes on Tuesday, the second straight day of outflows. That

followed a near-8-tonne fall on Monday, the biggest outflow this


    The bullion market is closely following U.S. data to gauge

when the Federal Reserve might raise rates. A U.S. Institute for

Supply Management services report is due later in the day, ahead

of the February nonfarm payrolls report on Friday.

    A robust economy could prompt the Federal Reserve to raise

interest rates soon which could hurt non-interest-bearing

bullion and boost the dollar.

    Seven of the Fed's 17 members have said they want the option

of a rate rise in June on the table, or have pushed in general

for an earlier increase, in the expectation that wages and

inflation will turn higher.

    The greenback held firm near an 11-year high versus a basket

of major currencies on Wednesday.

    Traders were also keeping an eye on the euro, which has been

subdued over the past few sessions ahead of a European Central

Bank policy meeting on Thursday and the implementation of its

government bond buying programme due to start this month.

Source: Reuters