Gold holds below 12-week high as Asian shares climb

[SINGAPORE] Gold fell further below a 12-week high on Thursday as Asian equities rose and the dollar regained its footing, dulling demand for the safe-haven metal.

Asian stocks mostly edged up after a rebound in oil and copper prices brought a semblance of calm, while the dollar regained ground lost on disappointing US retail sales.

Spot gold eased 0.1 per cent to US$1,228.27 an ounce by 0757 GMT. The metal on Wednesday jumped to its highest since Oct 23 at US$1,244, before paring gains to close flat.

"Gold has now tested US$1,245 three times and failed on each occasion. We believe gold could test US$1,215-20 in the coming days," said Jason Cerisola, a metals dealer at MKS Group.

The bearish mood towards commodities failed to offset disappointing US retail sales data that would have typically boosted safe-haven bids for the metal.

Data on Wednesday showed US retail sales recorded their largest decline in 11 months in December, prompting losses in the dollar.

But the greenback edged up in Asian trade on Thursday.

Gold prices are up nearly 4 per cent so far this month, after two straight years of declines, but the outlook for the year remains clouded.

UBS lowered its gold price forecast for the year to US$1,190 from US$1,200, saying it had underestimated the downside risks earlier.

"Downside risks have slightly been increased by the decline in oil prices given the potential positive impact this would have on the US economy and the implied absence of an inflation threat," UBS analysts said in a note on Thursday.

The dollar strength is also likely acting as a ceiling for gold rallies amid lower US yields and lurking concerns over global economic growth and deflation, they said.

HSBC, on the other hand, expects prices to average US$1,234 for the year, buoyed by safe-haven bids and physical demand in the top consuming region, Asia.

The firm expects total demand for gold, including jewellery, coins and exchange-traded funds, to increase 15 per cent this year to 4,127 tonnes.

REUTERS