Gold falls after 1.5% gain on Thursday

Stocks rebounded on Friday but were still set to end a bruising and volatile week lower, fed by growing uncertainty surrounding the US economic and policy outlook.

Spot gold was down 0.2 percent at $1,237.60 an ounce by 1400 GMT, while US gold futures for June delivery were up $1 at $1,238.50. Prices are up 1 percent this week, chiefly because of Thursday's 1.5 percent rally.

The metal has been hemmed into a narrow range by uncertainty over the path the US central bank will take to raising interest rates.
Fed Chair Janet Yellen, in a conversation with former Fed chairmen on Thursday, said that the US economy is still on track to warrant further rate rises. But US interest rate futures still indicate a less than 20 percent chance of a rate hike in June.

Higher rates would weigh on gold by lifting the opportunity cost of holding non-yielding bullion. Waning expectations for further rate increases this year helped gold to its best quarter in nearly 30 years in the three months to March.

"Janet Yellen said (the Fed) will be moderate in making hikes in the future, so the markets no longer anticipate the four interest rate hikes they did at the end of 2015," LBBW analyst Thorsten Proettel said.

Proettel added that he remains bearish on prices, saying that positioning on the futures markets looks overstretched, while inflows into gold-backed exchange-traded products is drying up. "We had huge inflows into gold ETPs in January and February, but they've just come to a stop," he said.

Data from the world's largest gold-backed exchange-traded fund - New York-listed SPDR Gold Shares - showed its holdings are little changed this week after posting the year's first weekly outflow last week.

Demand for physical gold from Asia has also been muted of late, analysts said.

In other precious metals, silver was up 0.6 percent at $15.30 an ounce, platinum gained 1.3 percent to $960.51 and palladium rose 1.6 percent to $541.63.

Source: Arab News