Gold prices were largely flat early on Thursday, as the metal continues to be rangebound on the back of disappointing US economic data and a lack of dramatic movements from the outside markets. Potential surprises from a US consumer inflation report on Friday could provide new catalyst to bullion, which is traditionally used as a hedge against a steady price increase, traders said.
Skepticism about economic recovery among institutional investors such as CALPERS and US banks, however, should push gold prices higher in the long term on safe-haven demand, fund managers said. Spot gold was at $1,207.80 an ounce at 2:31 pm EDT (1831 GMT) against $1,207.50 late in New York on Wednesday. US gold futures for August delivery settled up $1.30 at $1,208.30.
Bullion gave back gains earlier in the session after reports showed that new US claims for jobless aid tumbled to a near two-year low last week, and a slowdown in manufacturing activity and flat industrial output. This week, gold has been largely treading water in a $30 range after news that 346 tonnes of gold swap operations conducted by the Bank of International Settlements (BIS) in recent months stirred fears of gold dumping.
Gold rallied to an all-time high of $1,264.90 an ounce on June 21, but the metal has not breached above $1,230 in two weeks since then. On Thursday, gold was also pressured by a weaker US stock market due to the anemic economic data, but the metal was supported by a two-month high in the euro against the dollar.
"Bargain hunters want to buy it around $1,200, and (at) $1,217, profit-takers are all lined up," said Afshin Nabavi, head of trading at MKS Finance. Among other commodities, oil futures fell along with weaker economic sentiment, but the Reuters/Jefferies CRB commodity index was up 0.8 percent in a mixed market.
Among other precious metals, silver was at $18.26 an ounce against $18.24. Platinum was at $1,522.50 an ounce against $1,519.50, while palladium was at $463.50 against $464.50. Platinum group metals largely ignored M&A news, as shares in North America's biggest PGM producer Stillwater Mining Co rose on market talk that the palladium and platinum miner might be an acquisition target by Russian metals giant Norilsk Nickel.