Gold spends the week awaiting US data

GOLD prices started the week with a buoyant spike above US$1,800, only to lose momentum in the following days while wedging into a narrow US$25 range between the two major 50-day and 200-day Exponential Moving Averages.

The carry-over strength from last Friday's spike had taken gold prices to a three-week high. The precious yellow metal had gained over the weekend as investors took assurance from comments by US Federal Reserve chief Jerome Powell that the withdrawal of stimulus would be gradual.

Throughout most of the week, gold prices hovered above US$1,800 after the eurozone August CPI rose +3.0 per cent year on year, which was the largest increase in 93/4 years. The inflationary figure would have boosted demand for gold as a hedge against inflation, but gains in gold were limited after the 10-year German bund yield jumped to a five-week high on comments that the European Central Bank should discuss tapering at its next policy meeting.