Gold edged down on Friday as investors booked profits after a 1 percent rally, but it remained supported above $1,460 an ounce and on course for its biggest weeekly gain in more than a year Bullion has now recovered about 75 percent of massive losses incurred between April 12 and 16.
Sentiment, though buoyed, was still on an unsure footing with investors in exchange-traded funds heading for the exit, highlighted by further fund outflows on potential central bank sales and uncertainty over US monetary stimulus. Spot gold hit its highest since April 15 at $1,484.81 an ounce, dipping to $1,463.25, down 0.3 percent, by 1547 GMT.
US gold futures for June delivery rose as high as $1,484.80 an ounce before slipping to $1,461.80, down 0.6 percent. "There has been some profit-taking, although ... poor (US) Q1 GDP data missed the three percent target and that is encouraging for gold because the whole sell-off in the metal was linked to perceptions that the US economy was getting stronger and stronger," Societe Generale analyst Robin Bhar said. US first-quarter growth expanded at a 2.5 percent annual rate, missing economists' expectations for 3 percent. Meanwhile, a separate report on consumer sentiment showed a drop from the previous month.
Physical buying persisted in Asia, with premiums for gold bars in Hong Kong jumping to their highest level since October 2011 this week, at up to $3 an ounce to spot London prices. Premiums in Singapore stayed at their highest since October 2008 at $3 an ounce to the spot London prices on demand from Indonesia, Thailand and India. "The market rallied quite strongly yesterday and we thought we would see some easiness in the physical market, which hasn't been the case and there still seems to be some tightness, which puts the $1,500 level on the cards," MKS head of trading Afshin Nabavi said.
Holdings of the largest gold-backed exchange-traded fund, the SPDR Gold Trust, dipped 0.25 percent to 1,090.27 tonnes on Thursday, from 1,092.98 on Wednesday. Holdings are at their lowest level since September 2009. "Heavy disinvestment from ETF investors is being offset by strong physical demand in key markets such as India and China, but neither of these is likely to continue indefinitely, and which runs its course first could determine whether the (gold) price moves $100/oz higher or lower," Macquarie said in a note.
Silver fell 2 percent to $23.87 an ounce, having earlier risen to a 10-day high of $24.82. It is set for its highest weekly gain since January. The gold/silver ratio remained high on Friday with an ounce of gold buying about 60 ounces of silver, compared with less than 32 ounces in April 2011. Platinum gained 0.4 percent to $1,470.24 an ounce, while palladium was down 0.5 percent at $676.72 an ounce.
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