US MIDDAY: gold soars

Gold edged higher early on Friday in response to a weaker dollar but remained on track for its sharpest weekly drop in more than two months as strong US economic data raised uncertainty over the timing of a slowdown in stimulus measures. Spot gold was up 0.3 percent to $1,245.66 an ounce at 1519 GMT, after hitting a fresh four and a half month low of $1,236.29 in the previous session.
US gold futures for December delivery rose 0.2 percent to $1,246.10 an ounce.
Gold was on track for a 3.4 percent weekly drop, while spot silver also headed for its worst week since mid-September, down 3.7 percent so far.
"The gold price drop seen earlier this week has weakened the technical picture and the next important level to watch is obviously $1,200," said Bernard Dahdah, precious metals analyst at Natixis.
"Evidence that the US economy is improving will lift the dollar, putting further pressure on the gold price in coming weeks."
A break of the key support area of $1,238-$1,240 an ounce would open up the potential for a broader move towards $1,180, ANZ said.
The dollar fell 0.4 percent against a basket of currencies.
Solid US data over the past few weeks was hurting bullion prices as it could bolster the case for curbing stimulus soon. The Federal Reserve's massive bond-buying programme has burnished gold's appeal as a hedge against inflation.
Uncertainty over the timing of this tapering has pushed investors to take money out of gold, causing the metal to drop 25 percent this year.
Janet Yellen - the likely next Fed chair - said last week that she would press forward with the bank's ultra-easy monetary policy until officials were confident a durable economic recovery was in place that could sustain job creation.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 3.6 tonnes to their lowest since early 2009 at 856.71 tonnes on Thursday. Outflows have totalled 450 tonnes this year.
Silver rose 0.1 percent at $19.93 an ounce, having touched its lowest since mid-August at $19.68 on Thursday.
Spot platinum rose 0.2 percent to $1,388.74 an ounce, while palladium gained 0.6 percent to $715.47 an ounce.
HSBC cut its 2013 platinum price forecast to $1,500 and ounce from $1,580 an ounce, and its 2014 forecast for the metal by $100 to $1,625 an ounce, saying weaker gold prices and a shift of investment into equities had hurt platinum this year.