Gold barely moved in Asia on Thursday ahead of US economic data but physical demand started to emerge with prices hovering far below the key $400 psychological level, traders said.
Spot gold was at $395.75/396.50 an ounce compared with $395.00/395.50 last quoted in New York. The yellow metal touched a bid high of $400.80 an ounce on Tuesday before gradually falling due to a firming dollar.
In Tokyo gold futures, the benchmark June 2005 gold contract lost seven yen per gram to 1,411 yen per gram, tracking declines in New York's Comex market. Dealers are waiting for US weekly jobless claims on Thursday and July retail sales, which are expected to show a rise of 1.1 percent.
The data will set the price trend for the dollar, whose movements have dictated gold prices lately. The market also wants to see if the data reflects Federal Reserve optimism about the economy after it raised interest rates this week to 1.50 percent from 1.25 percent, boosting the dollar.
"I would expect to see a rangebound trading of $393 to $398 today. There's physical demand but not very aggressive," said one dealer in Hong Kong, a key bullion trading city in East Asia.
"I think gold may test the lower levels again, so I guess more demand will emerge if prices fall to $390," he said. Some analysts said gold could rebound to $403 later this week but a subsequent technical correction would drag down the price to around $385 an ounce.
A break of that level could trigger a decline to as low as $372 an ounce, they said. Some dealers, however, believed that fears of terrorist attacks ahead of the Olympics in Athens, rising crude oil prices and tension in the Middle East would provide some support for the safe-haven metal.
In other precious metals, spot platinum, which hit a 3-1/2 month high on Wednesday at $852 an ounce, was at $843/848, up from $834/839 in New York. Sister metal palladium was at $214/219 an ounce, versus $210/215 in late US trade.
Silver was at $6.51/6.53 an ounce, versus $6.50/6.53 in New York.