Gold price crawls up but economic recovery hopes limit gains

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Gold ticked up on Monday but was unable to breach the upside limit of a recent trading range. (Reuters) Gold ticked up on Monday but was unable to breach the upside limit of a recent trading range. (Reuters)
SummaryGold ticked up on Monday but was unable to breach the upside limit of a recent trading range.

Gold ticked up on Monday but was unable to breach the upside limit of a recent trading range as mostly upbeat U.S. data took some shine off the precious metal, which withers when economic recovery gains traction.

While U.S. non-farm payrolls rose by a modest 157,000 in January, job gains in the two previous months were revised up by 127,000. The U.S. manufacturing sector hit nine-month highs in January and U.S. consumer sentiment rose more than expected.

The flurry of mostly upbeat data followed a surprise contraction in gross domestic product in the fourth quarter reported last Wednesday.

"Investors remain fairly optimistic in the U.S. recovery, which makes gold less attractive, even though recent data is rather a mixed bag," said Chen Min, an analyst at Jinrui Futures in the southern Chinese city of Shenzhen.

"Unless we see surprisingly good news for gold, it will be trapped in a narrow range of roughly $1,660 and $1,680 an ounce."

Trading interest in the Chinese market is expected to wind down this week, as China approaches a week-long Lunar New Year holiday starting this Saturday, Chen added.

Spot gold inched up 0.3 percent to $1,671.16 an ounce by 0343 GMT. U.S. gold was little changed at $1,672.10.

The benchmark gold on Tokyo Commodity Exchange hit a record high of 5,000 yen a gram, boosted by a weak yen on expectations that the Bank of Japan will continue loosening its monetary policy.

Five weeks into 2013, spot gold is down 0.2 percent so far this year, after a 12-year winning streak, as recent data from Europe to China and the United States suggest a brighter outlook for the global economy.

Apart from dulling its safe-haven appeal, signs of a recovering U.S. economy are also weakening the case for the Federal Reserve to prolong its monetary stimulus, cutting gold's draw as an inflation hedge.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, were unchanged at 1,328.092 tonnes for the fourth consecutive session. The fund recorded an outflow of 22.728 tonnes

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