Gold steadies at $1,290/oz, heads for 2nd weekly drop
London (May 9) Gold held steady around $1,290 an ounce on Friday, underpinned by strong chart support, but remained on track to fall for a second week as the dollar took support from euro weakness and traders awaited further news on Ukraine.
The dollar extended gains against the single currency after posting its biggest one-day rise since mid-March on Thursday, as investors positioned for more monetary stimulus from the European Central Bank.
Spot gold fetched $1,290.84 an ounce at 1353 GMT, little changed from $1,289.00 late on Thursday.
It found solid support at its 100-day moving average of $1,287 an ounce, dealers said.
US gold futures for June delivery were up $3.60 an ounce at $1,291.30.
Gold is down just over half a percent on the week, still searching for direction as concerns over the stand-off between Russia and the West over Ukraine abated, and Federal Reserve Chair Janet Yellen held pat on US monetary policy.
"We've been moving in a range between $1,290 and $1,310," Natixis analyst Bernard Dahdah said.
"Yellen didn't change her stance (on policy) and the Ukraine story has been factored in already, so unless something cataclysmic happens, I think we're going to stay stuck."
The metal rallied to three-week highs on Monday on the back of elevated tensions in Ukraine, but it failed to maintain those gains after Russian President Vladimir Putin said he was willing to negotiate with European officials over the crisis.
Pro-Moscow separatists in eastern Ukraine ignored a public call by Putin to postpone a referendum on self-rule, however, declaring they would go ahead on Sunday with a vote that could lead to war. European shares eased, but are expected to be underpinned by expectations that the ECB could employ new measures, such as a rate cut, to support the region's economic recovery.
READY TO TAKE ACTION
ECB President Mario Draghi said on Thursday that the bank was ready to take action next month to boost the euro zone economy if updated inflation forecasts merited such a move.
"Our European economists are now calling for the ECB to cut rates across the whole interest rate corridor in June by 15 bps," UBS said in a note.
"For gold, this has a negative read-through, principally through the FX impact." "It's one further variable that will encourage weaker sentiment towards the yellow metal."
Interest in gold was muted overnight in Asia, the leading market for physical gold.
Gold premiums in India, the world's second-biggest bullion consumer, slipped this week as demand eased on expectations of a relaxation in import curbs. Dealers across other parts of Asia also said demand was much lower than last year.
Among other precious metals, silver was up 0.1 percent at $19.14 an ounce, while spot platinum was down 0.5 percent at $1,426 an ounce and spot palladium was down 0.1 percent at $799.90 an ounce.
Platinum prices have been supported by a miners' strike in major producer South Africa, currently in its sixteenth week.
South African platinum producer Lonmin is laying the groundwork to restart its operations next week after a concerted effort to woo striking miners back to work by taking its latest wage offer directly to them.
