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Gold inches up, caution before ECB, US data
Wed Jan 13, 2010 10:11pm EST


By Chikako Mogi

TOKYO, Jan 14 (Reuters) - Gold inched up on Thursday, keeping
a bullish tone from the day before when a weaker dollar spurred
short-covering and physical buying, but investors were trading
cautiously before the European Central Bank's policy decision and
U.S. data.

Gold prices fell sharply on Tuesday when China's decision to
raise bank reserve requirements sparked fears that spending would
be curtailed and decrease bullion's appeal as a hedge against
inflation.

As the dollar remained under pressure, players shifted their
immediate focus to the ECB's policy decision and remarks by ECB
President Jean-Claude Trichet, as well as U.S. retail sales and
weekly jobless claims due later in the day.

"People are cautiously bullish, but liquidity is not enough"
as they await the key events and see how the dollar moves, said
Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.

The news from China provided an excuse to take profits
following the market's rally since the start of the year, he
said, adding that he expected prices to stay between $1,120 and
$1,150 for now.

Spot gold XAU= edged up 0.5 percent to $1,143.40 per ounce
as of 0248 GMT, compared to New York's notional close of
$1,137.60.

U.S. gold futures for February delivery GCG0 were up 0.6
percent at $1,143.30 per ounce, compared to $1,136.80 an ounce on
the COMEX division of the New York Mercantile Exchange.

As the market steadied, investment outflows also halted.

The world's largest gold-backed exchange-traded fund, SPDR
Gold Trust (GLD), said its holdings stood at 1,115.884 tonnes as
of Jan. 13, unchanged from the previous business day. The
holdings hit a record high of 1,134.03 tonnes on June 1.
[GOL/SPDR]

Traders said if the dollar remained on a weak trend, gold
could test new highs in the coming months.

Gold prices will likely eclipse last year's record levels in
the first half of the year, as stronger investment demand offsets
the impact of relatively weak jewellery fabrication and lower
de-hedging activity, a closely watched report said on Wednesday.

Gold could average $1,175 an ounce in the first half of 2010,
up from last year's average of $972, GFMS, a London-based
consultancy said in an update of its Gold Survey 2009 report.
[ID:nN12203712]

Precious metals prices at 0250 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 1142.80 5.20 +0.46 4.30
Spot Silver 18.65 0.06 +0.32 10.81
Spot Platinum 1586.00 12.00 +0.76 8.11
Spot Palladium 424.00 2.50 +0.59 4.56
TOCOM Gold 3378.00 56.00 +1.69 3.65 45808
TOCOM Platinum 4654.00 55.00 +1.20 6.23 14214
TOCOM Silver 55.40 1.50 +2.78 7.16 377
TOCOM Palladium 1245.00 9.00 +0.73 6.87 303
Euro/Dollar 1.4542
Dollar/Yen 91.57
TOCOM prices in yen per gram. Spot prices in $ per ounce.
(Editing by David Dolan)

http://www.reuters.com/article/idUSTOE60D01H20100114