Gold fell slightly on Thursday, although it held near $1,300 an ounce, after mixed US data signalled a still uncertain outlook for the world's biggest economy, and the dollar pared earlier gains. Palladium and platinum eased slightly after a three-day rally spurred by rising labour tensions in major producer South Africa. On Wednesday platinum had hit a two-month high and palladium a 2-1/2 year peak, and their strength had also helped propel gold prices higher.
Spot gold fell 0.4 percent to $1,299.70 an ounce by 1436 GMT but was still near the one-week high it reached in the previous session. US gold futures dropped by the same margin to $1,300.30 an ounce. The dollar, stronger initially, turned flat against a basket of main currencies after a mixed set of US data.
New applications for US unemployment benefits hit a seven-year low last week, while consumer prices recorded their largest increase in 10 months in April. But US industrial output fell at its fastest rate in more than 1-1/2 years in April as factory production slumped, tempering hopes for a big jump in economic growth after a winter slowdown. US 10-year Treasury yields fell below 2.5 percent. Returns from US bonds are closely watched by the gold market, given that the metal pays no interest.
"There seems to be some inconsistencies about what rates markets are doing and the general strength of the dollar against the euro," Deutsche Bank analyst Michael Lewis said. South Africa's longest and costliest strike ever has taken a violent turn in recent days, with four platinum miners killed as more employees try to report for work at the world's top producers, defying union orders.
South Africa's police minister on Wednesday vowed to crack down on violence against miners trying to return to work and arrest "within hours" strikers that he said were behind a campaign of intimidation. "Whatever the ultimate outcome ... the strike is entering a much more dangerous phase, since with some workers returning to work, there is now increased likelihood of violence and less chance of a negotiated settlement," INTL FCStone analyst Edward Meir said.
Platinum was down 0.2 percent at $1,470.25 an ounce after rising to $1,483.50 on Wednesday, while palladium fell 1 percent to $815.70 an ounce but was still near its 2-1/2 year peak of $827.50 in the previous session. HSBC analysts said a return to work by miners would be negative for platinum group metal prices in the near term, given the recent rally. "However, we remain bullish in the medium to longer term," the analysts said. Spot silver fell 1.1 percent to $19.54 an ounce, retreating from a two-month high of $19.97 on Wednesday.
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