Gold retreats as global equities hit all-time highs

[LONDON] Gold fell on Friday, on track for a third successive weekly loss as strength in global equities diverted interest, though uncertainty over the timing of a US rate rise pegged prices in a narrow range.

World stocks hit all-time highs on Friday as corporate updates in Europe and a post-dotcom-boom peak for the US Nasdaq stoked investor optimism.

Spot gold was down 0.5 per cent at US$1,187.13 an ounce at 1140 GMT, while US gold futures for June delivery were down US$7.30 an ounce at US$1,187.00. Spot prices are down 1.4 per cent this week, their biggest weekly loss in seven weeks.

"The news this week in general has been gold-friendly - weaker dollar, weaker US data and Middle East tensions," Saxo Bank analyst Ole Hansen said.

"But it has failed to ignite, leaving the metal rangebound for now." "The stock market remains well behaved, and while that continues, the demand is just not strong enough."

Adding to pressure on gold, the dollar recovered early losses against the euro after the chairman of eurozone finance ministers said that despite commitment to strike a deal on Greece they were "still far" from conclusion.

Attention is turning to the Fed's policy meeting next week for stronger clues on when the US central bank will start increasing rates. That would raise the opportunity cost of holding non-yielding bullion, while boosting the dollar.

Weak data on US jobless claims, manufacturing and home sales have hurt the dollar this week, boosting uncertainty over whether the Federal Reserve will conduct its first US rate rise in nearly a decade in June or September.

"Should the (Fed) ... prove hawkish, we may expect gold to fall swiftly and embark on a new downtrend to US$1,145," said Howie Lee, an analyst at Phillip Futures.

Traders were also eyeing the Asian physical markets for signs of increased demand that would support global prices.

In China, the second-biggest consumer, premiums fell to about US$1 an ounce over the spot price from about US$2 the previous day, while in top consumer India, demand is set to taper after strong sales during Tuesday's Akshaya Tritiya festival.

Silver was down 0.6 per cent at US$15.77 an ounce, while platinum was down 0.5 per cent at US$1,126.99 an ounce and palladium was up 0.2 per cent at US$768.72 an ounce.

REUTERS