Gold rises above US$1,200, but robust dollar curbs gains

[SINGAPORE] Gold edged above US$1,200 an ounce on Thursday after a three-day losing streak as equities weakened, but gains were limited by robust US economic data and strength in the dollar.

Spot gold had ticked up 0.4 per cent to US$1,203.70 an ounce by 0343 GMT, after losing 1 per cent in the last three sessions, as Asian stocks slipped after Wall Street continued to pull back from record highs.

However, with the dollar at an 11-1/2-year peak after strong US data and the technical picture looking weak, analysts expect gold to head lower.

The next support for gold currently comes in at US$1,195, said technical analysts at ScotiaMocatta.

"We expect a further test of this level, and should we see it break, it would be bearish for gold and open a test of the US$1,131-low (reached in November 2014)," they said.

Gold is on shaky ground on the back of robust US economic data, fears of an interest rate hike in the near future and waning investor sentiment.

Data on Wednesday showed US private employers added 212,000 private-sector jobs in February. Separately, the Institute for Supply Management said its services index was 56.9 in February, up slightly from 56.7 in January.

A robust economy decreases the appeal of bullion, often seen as an alternative investment during times of economic and geopolitical uncertainty. A stronger dollar makes gold more expensive for holders of other currencies.

Investors are now waiting for US nonfarm payrolls data on Friday for more clues about the economy.

The data is also being eyed to see how it could impact the timing of the Federal Reserve's move to hike interest rates. Higher rates could hurt demand for non-interest-bearing assets such as gold.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, saw its holdings drop to a one-month low earlier this week, after posting its biggest one-day outflow this year.

For trading cues on Thursday, traders will be eyeing the European Central Bank's policy meet. The ECB, which starts its quantitative easing, or bond-buying, programme of more than 1 trillion euros this month, is expected to detail the plan after the meeting.

REUTERS