COMEX gold prices finished on Thursday with moderate losses, pushed lower by a robust regional US manufacturing reading, traders said.
Gold declined as the euro lost ground against the dollar after a Philadelphia Federal Reserve business conditions survey surpassed all forecasts.
That was after the euro was knocked down early when US core producer prices rose in line with expectations, reinforcing the view that the Federal Reserve will tighten credit at a "measured" pace.
"Gold is keying off the euro, which is keying off of the other things (US economic data). But the euro is where all the knee-jerk reaction is happening," said one gold trader.
August gold lost $1.20 to end at $404.40 an ounce, but remained restricted to a range between $401.80 to $406.30 an ounce.
The Philly Fed index for July came in at 36.1, overshooting economists forecasts for a drop to 25.0 from Junes 28.9 reading.
The June US producer price index fell 0.3 percent, compared with economists forecasts for a rise of 0.2 percent. But, excluding food and energy prices, the PPI rose by 0.2 percent, as expected.
Tame inflation data tends to undermine gold's attractiveness as an inflation hedge. And a strengthening dollar diminishes overseas investors advantage when buying dollar-denominated assets like gold.
Golds downside was seen limited by other data, however, that presented a mixed view of US economic growth, underscoring that the Fed would probably not be able to take an aggressive approach in raising interest rates.
One broker said gold had been trading lower with the euro, "But I think the funds want to buy this thing (gold) because they don't think were going to get a lot of interest rate increases. So, longer term, gold is still a cheaper buy."
For now, traders said they expected gold to continue trading in a range between $400 and $410 an ounce on August futures.
"If you get through $398.20, you will see $393. If you get through $410.50 on the upside, you will see $420. But, for now, were stuck between a rock and a hard place in this $10 range," a technical trader said.
Whether gold makes it through resistance on Friday will depend on what happens with the US consumer price index, the euro, the dollar, and how the US equity and Treasury markets respond, traders said.
COMEX estimated final gold volume at 58,000 contracts. Silver turnover was seen at 14,000 lots.
Spot gold was quoted at $403.50/4.25 late Thursday, down from $404.75/5.50 an ounce previously. Thursday's afternoon fix in London was $403.15 an ounce.
September silver resumed its upward trend to finish 5.10 cents higher at $6.663 in a $6.54 to $6.695 range.
Spot silver moved up to $6.63/65 an ounce from $6.59/6.62 late Wednesday. The silver fix was at $6.54.
NYMEX October platinum trimmed its losses to close $1.50 lower at $814.0 an ounce, in a range identical to Wednesdays between $805 to $817. Spot platinum fetched $815.00/820.00 an ounce.
September palladium fell $2.35 to $226 an ounce. Spot palladium was quoted at $219.00/225.00 an ounce.
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