13 Feb 2014
LONDON, Feb 13 (Reuters) - Gold hovered below a three-month high on Thursday, struggling to break above $1,300 as investor caution ahead of a series of U.S. economic figures offset support from a sharply lower dollar and weaker equity markets.
Spot gold was up 0.1 percent at $1,291.61 an ounce by 1101 GMT, having hit a three-month high of $1,295.91 on Wednesday.
Traders said there was strong technical resistance at the $1,300 level, last seen on Nov. 8.
U.S. gold futures for February delivery were down 0.3 percent at $1,291.80 an ounce.
"The gold market is still holding quite well but is having some difficulties to test the $1,300 psychological barrier as traders are digesting the gains made earlier in the week," Quantitative Commodity Research owner Peter Fertig said.
"That level could be breached as long as the environment for the metal remains positive, with some uncertainty in the equity markets and a lower dollar ahead of today's data."
The dollar fell 0.5 percent against a basket of major currencies, while a rally in global shares ended after a week of gains on relief over the continuity in U.S. Federal Reserve policy, hints that the European Central Bank could provide more support in the euro zone and an easing of pressure on emerging markets.
Usually, gold holds an inverse correlation with the dollar, with a weaker U.S. currency making the metal cheaper and increasing demand. Meanwhile, investor risk aversion tends to increase interest in gold, often regarded as a safe haven.
But at times over the past few sessions the metal has moved in the same direction as equities.
The market awaited U.S. jobless claims and January U.S retail sales data, due for release at 1330 GMT, for further direction on the dollar and gold.
Recent U.S. data, including two straight months of weak jobs growth, have raised questions over whether the world's biggest economy can sustain the strength it showed in the second half of last year and made some investors hope the Fed would take a slower approach to tapering its monthly bond purchases.
"Gold may need a compelling reason to hold onto gains over $1,300 lest profit taking chips away at gains," HSBC said in a note.
Higher gold prices over the past few sessions have curtailed physical buying from China, the world's biggest gold consumer, after trading volumes hit their highest since May at the start of the week.
Premiums for 99.99 percent purity gold fell to $5 on Thursday from $7 in the previous session.
Silver was unchanged at $20.19 an ounce.
Platinum was trading down 0.7 percent at $1,394.00 an ounce, while palladium lost 0.1 percent to $723.75 an ounce. - Reuters
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1,292.70 a troy ounce during Asian trading, down 0.18%.
Stimulus measures such as Fed bond purchases tend to weaken the dollar by suppressing long-term interest rates to make stocks more attractive, thus bolstering gold's role as a portfolio hedge.