NEW YORK (Reuters) - Gold edged up in light volume on Wednesday, trading in a narrow range as investors focused on an upcoming European Central Bank meeting and trends in equities prices against the backdrop of a better economic outlook.
Platinum rose 1.5 percent on concerns over the supply outlook in the world’s top-producing country, South Africa, and as a brighter global growth outlook boosted investor appetite for the metal which is largely used as an autocatalyst.
U.S. gold futures volume was sharply below average ahead of the ECB’s policy meeting on Thursday which will be followed by comments about its monetary outlook. Analysts said the ECB is unlikely to contemplate an interest rate cut despite the euro’s sharp rise.
Gold found little direction from U.S. stocks which were little changed on Wednesday. Investors, without any major economic reports to guide them, awaited fresh incentives to trade after rallies took the S&P 500 to five-year highs on Tuesday.
“With major US equity indices near record highs, potential gold investors chose to stay on the sidelines as risk appetite improved,” said James Steel, metals analyst at HSBC.
Less physical interest after the end of Chinese New Year stockpiling may leave the metal more susceptible to changes in short-term risk sentiments, Steel said.
Spot gold was up 0.3 percent at $1,677.16 an ounce at 3:01 PM EST (2001 GMT).
U.S. gold futures for April delivery settled up $5.30 an ounce at $1,678.80, with trading volume about 45 percent below its 250-day average, preliminary Reuters data showed.
Gold prices are flat from the start of the year, struggling for traction as a run of better economic data boosted the appeal of assets more highly geared to the economic cycle, such as equities and industrial commodities.
“Certainly the stronger performance of more conventional assets, certainly equity markets, has taken the shine off gold,” Deutsche Bank analyst Daniel Brebner said.
Silver was unchanged at $31.78 an ounce.
The gold market is digesting the Reserve Bank of India’s statement that it could limit gold imports by banks in “extreme circumstances,” as the world’s biggest consumer of gold battles a record-high current account deficit.
Underpinning prices was Tuesday’s data showing record-high annual gold flows from Hong Kong into China in 2012. China is vying with India to be the leading buyer of bullion.
The positive economic data that has undermined gold fuelled interest in the platinum group metals, which are largely used in auto catalytic converters and are highly sensitive to car demand.
Platinum hit a near 17-month peak at $1,740 an ounce and was last up 1.5 percent to $1,731.45 an ounce, while palladium was down 0.5 percent at $759.50 an ounce, having earlier reached its highest in 17 months at $769.50.
Additional reporting by Jan Harvey in London; editing by Jim Marshall