Gold holds near one-week low as stronger US economy data weighs

[BENGALURU] Gold on Thursday held close to a one-week low hit in the previous session, pressured by upbeat US growth data for the third quarter and Federal Reserve chair Janet Yellen's bullish view of the economy.

A lack of clear drivers has kept gold between US$1,265 and US$1,300 an ounce throughout November, its narrowest monthly range in 12 years.

Despite the volatility overnight, it was another subdued session across the precious complex today in Asia, with gold struggling above US$1,285 an ounce consistently, MKS analyst Alex Thorndike said in a note.

Spot gold was little changed at US$1,283.95 an ounce at 0444 GMT. On Wednesday, it fell 0.8 per cent to touch its lowest since Nov 22 at US$1,281.90. Still, bullion is heading for its first monthly gain since August, having risen one per cent for the month.

US gold futures were up 0.1 per cent at US$1,283.10.

"We see gold prices remaining subdued over the next two months but after that it will start to rise," said Richard Xu, a fund manager at China's biggest gold exchange-traded fund, HuaAn Gold.

"It would be flat for a few days because the economy is great and the financial markets are in sync with inflation."

The US economy has gathered steam this year and will warrant continued interest rate increases amid a strengthened global recovery, Ms Yellen told Congressional leaders on Wednesday in her final scheduled testimony on Capitol Hill.

Higher US interest rates would keep pressure on gold prices as investors seek returns in assets other than non-interest bearing bullion.

Data showed the US economy grew faster than initially thought in the third quarter, notching its quickest pace in three years.

Spot gold may break a support at US$1,281 per ounce and fall more towards the next support at US$1,277, according to Reuters technical analyst Wang Tao.

"While we remain cautious on it (gold prices) over three months, we regard setbacks as opportunities to add exposure," UBS analysts said in a note.

"In the past, early stages of monetary policy normalisation hurt gold; but this time such adjustments resemble baby steps and likely will only be undertaken in sync with rising inflation," they said.

In other markets, the US dollar index , which gauges the greenback against a basket of six major rivals, held steady as investors kept an eye on the progress of the US tax reform legislation that could see a likely decisive vote later this week.

Silver fell to an eight-week low at US$16.47 an ounce before recovering to US$16.58.

Palladium gained 0.7 per cent at US$1,020.75 an ounce, while platinum rose 0.6 per cent at US$942.49.

In November, palladium has gained 4.1 per cent, platinum is up 3.1 per cent, while silver is down 0.7 per cent.

REUTERS