Gold steady near $1,100

By Miho Yoshikawa

TOKYO (BestGrowthStock) – Gold slipped on Tuesday, paring the previous day’s sharp gains, with selling partly attributed to firmness in the dollar after Australia’s central bank surprised markets by leaving its interest rates unchanged.

Bullion had rallied on Monday by more than $25, or over 2 percent, after data showed the U.S. manufacturing sector grew in January at a faster rate than expected, suggesting an improving outlook for the economy and inflationary pressures ahead.

But investors became cautious and were mostly taking a wait-and-see attitude ahead of a key U.S. jobs report due later this week to gauge prospects for the U.S. economy and the dollar.

“People are thinking of inflation, and this has created a situation that makes it difficult to sell gold,” which is traditionally used as a hedge against inflation, said Kazuhiko Saito, chief analyst at Tokyo’s Fujitomi Co Ltd.

Spot gold was at $1,101.70 an ounce at 0557 GMT (12:57 a.m. EST), down 0.3 percent from New York’s notional close of $1,105.30, after earlier falling as low as $1,098.60.

On Monday it rose as high as $1,107.50, its highest since January 21.

In the currency market, the euro briefly fell below $1.39 soon after Australia’s surprise decision on interest rates, but later returned to levels little changed from late Monday in New York.

Investors are now turning their attention to the U.S. monthly employment data, due on Friday, for further clues on the health of the economy, Saito said.

Economists polled by Reuters are looking for a slim gain in U.S. payrolls in January, though it is not expected to be enough to put a dent in the 10 percent unemployment rate.

“People are expecting strong figures from the employment data, but it could turn out to be a case of selling on the news,” Saito said.

He said the gold market was also looking to the New York stock market for direction, because it reflects the economic outlook.

U.S. stocks (Read more about the stock market today. ) rose on Monday as the better-than-expected data on the manufacturing sector and earnings from Exxon Mobil revived bullish sentiment after stocks closed out their worst month in almost a year. (.N: )

U.S. gold futures for April delivery fell 0.2 percent to $1,102.80 an ounce on the COMEX division of NYMEX.

A solid economic recovery would also help boost platinum and palladium, which rose on Monday after the manufacturing data, due to their industrial application in auto catalysts.

Spot platinum was down 0.5 percent at $1,541 per ounce. Spot palladium was at $426.25 per ounce, down 0.5 percent from $428.50 in New York.

The world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings stood at 1,111.922 tonnes as of February 1, unchanged since January 19.

The world’s largest silver-backed exchange-traded fund, the iShares Silver Trust, said its silver holdings stood at 9,355.98 tonnes as of February 1, down 0.3 percent from the previous business day.

Penny Stocks

(Additional reporting by Risa Maeda; Editing by Michael Watson)

Gold steady near $1,100