March 28, 2012 / 7:03 AM / 7 years ago

Gold hovers below $1,680/oz; U.S. data eyed

SINGAPORE (Reuters) - Gold slipped below $1,680 an ounce on Wednesday, as investors awaited more trading cues from U.S. data after recent hints from the U.S. Federal Reserve chairman on more stimulus propelled bullion to a two-week high near $1,700 in the previous session.

A goldsmith poses with gold bangles in his jewellery shop in Amman July 28, 2011. REUTERS/Majed Jaber/Files

After defending very low interest rates and triggering a rally in bullion prices earlier in the week, Ben Bernanke cautioned it is too soon to declare victory in the U.S. recovery and said the Fed would take no options off the table on further action to stimulate growth.

Expectations of further monetary easing buoyed sentiment in gold, which benefits from a higher inflation outlook should more quantitative easing be launched.

“Bernanke was highlighting his uncertainty about the sustainability of the recent uptick in the U.S. data,” said Jeremy Friesen, commodity strategist at Societe Generale in Hong Kong.

“It is negative for the dollar and positive for expectations on stimulus, both of which should work in the advantage of gold.”

Americans were more worried about inflation in March than at any time in the last 10 months and consumer confidence waned in the wake of higher gasoline prices, but their view of their present situation rose to the highest level since September 2008.

Spot gold eased $3.05 an ounce to $1,676.99 an ounce by 0611 GMT, after falling more than half a percent in the previous session.

U.S. gold fell $7.80 an ounce to $1,677.10 an ounce.

Investors will closely watch data from the United States for the rest of the week, including February durable goods orders later in the day, weekly initial jobless claims on Thursday, February personal income and spending, March Chicago PMI and University of Michigan March sentiment readings on Friday.

SocGen’s Friesen expected the U.S. data to take a turn for the worse in coming months and the Fed to eventually adopt more monetary easing to stimulate growth.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings edged down 0.16 percent to 1,286.62 tonnes by Tuesday, after gaining 6 tonnes, or half a percent, in the previous session.

In other markets, Asian shares drifted lower on Wednesday, after rallying the previous session on hopes for further stimulus from the Fed, as investors waited for more clues on the state of the U.S. economy.

Asia’s physical market was muted despite the price spike in the previous session, as investors weighed Bernanke’s comments from the past few days.

“People are not sure about what Bernanke has said and has not said, and they are waiting for more cues on prices,” said a Singapore-based dealer.

India’s jewellers remained on strike, but the government has agreed to examine their demands for removal of an excise duty on unbranded jewellery, but won’t reduce import duty on gold and platinum.

Editing by Himani Sarkar

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