Gold prices moved lower on Friday and were set to end the week little changed, undermined by a steadier dollar against the euro after positive U.S. trade deficit data lifted investor appetite for riskier assets.
The dollar steadied against the euro and world shares rose after data showed that the U.S. trade deficit reached its narrowest in nearly three years in December at $38.5 billion. That suggests the economy did much better in the fourth quarter than initially estimated.
Wider markets were also underpinned by overnight Chinese export and import figures, which signalled a surge in January, pointing to robust domestic demand and a pickup in the economy not solely explained by the timing of the Lunar New Year holiday, which begins this weekend.
“Our fundamental view is that gold is rolled over, meaning that it doesn’t have too much upside because of improving appetite for riskier assets, and will probably continue trading around current levels,” SP Angel analyst Carole Ferguson said.
“Although people are getting a little bit concerned about what’s happening in Spain and Italy, generally we sense that the U.S. economy is recovering (and) China is in better shape, which reduces demand for safe havens.”
Gold was down 0.3 percent at $1,666.35 by 1457 GMT. U.S. gold futuresfor April delivery dropped 0.2 percent to $1,668 an ounce. Spot silver fell 0.1 percent to $31.41 an ounce.
Gold was also weighed down by the lack of inflationary pressures in Europe, China, the United States and other major markets, analysts said.
“Inflation, the other driving factor for gold, is not seen as a threat for the time being, and investors look mostly at risky assets like equities or even more industrial metals like platinum and palladium, which are more in focus than gold at the moment,” Commerzbank analyst Eugen Weinberg said.
Analysts however said that there continue to be macro elements that are widely supportive for gold, such as prolonged quantitative easing measures, which debase currencies in favour of hard assets like gold.
“With global central banks engaging in highly accommodative monetary policies, investors may choose to seek quality hard assets such as bullion,” HSBC said in a note.
On the upside, the SPDR Gold Trust, gold’s largest exchange-traded fund (ETF), saw its first inflow since mid-January in the previous session, rising a modest 1.8 tonnes. Its holdings are down nearly 21 tonnes this year, compared with a rise of 22.6 tonnes in the same period of 2012.
Holdings in the iShares Silver Trust were up 25.6 tonnes on Thursday, bringing its total inflow for the week to 67.86 tonnes. So far this year, its holdings were up 361.42 tonnes.
Platinum and palladium extended losses, after having rallied to their highest levels for more than a year and a half earlier this week, as speculative investors started to take profits.
Spot platinum fell 0.1 percent to $1,714.24 an ounce, having risen as high as $1,740 earlier this week.
Palladium was down 0.5 percent at $744.22. It touched its highest since September 2011 at $769.50 an ounce on Wednesday.
However, fundamentals remain strong for platinum group metals, used in auto catalysts and jewellery, due to a more positive economic outlook and mining disruptions in South Africa, as well as a drop in palladium output from Russia. (Editing by Jane Baird and James Jukwey)
By Clara Denina
LONDON, Feb 8 (Reuters)