Gold jumped out of a tight trading range at the start of New York dealing on Friday, rising to show a 0.5% weekly gain at $1227 an ounce as investment capital moved into "safe haven" assets on news of a sharp drop in US retail sales.
Falling by 1.2% in May – the fastest pace since Sept. – the headline retail figures sent the Dollar and Treasury bonds higher while stock markets gave back an earlier rise.
US crude oil contracts lost 1.8% on the news, falling below $74.50 a barrel.
Gold priced in Euros and Sterling reversed the week's near-2% drop, jumping above €32,600 per kilo and £844 an ounce respectively.
"The gold market [was] very quiet after profit-taking" mid-week, says a note from Walter de Wet at Standard Bank.
"However, there is buying interest on dips," he says, pegging support for Gold Prices at $1210 with resistance at $1228.
"Yesterday's drop was seen as another opportunity to Buy Gold," agrees Bayram Dincer, commodity analyst at LGT Capital Management in Pfaeffikon, Switzerland, and an advisor to the royal family of Liechtenstein.
"Persistent high holdings and new inflows into ETFs at current prices are supporting."
"Investment demand for gold remained strong" this week, says French bank Natixis in its latest precious-metals analysis, also noting Thursday's additional holdings for the SDPR Gold Trust – the world's largest Gold ETF – as well as a surge in Gold Coin demand.
"The long-term outlook remains positive," says another London dealer, citing "growing investor interest in long dated Gold Futures."
New data released in the UK today showed Industrial and Manufacturing Production both falling in April from March.
Factory input prices, in contrast, were stronger than analysts forecast, rising 11.2% year-on-year.
The Bank of England – which yesterday kept its key interest rate on hold at a record low of 0.50% for the 15th month running – today said that household expectations for inflation, as measured by its quarterly survey, jumped in May to their highest level since the commodity-price spike of mid-2008, rising to 3.3% for the 12 months ahead.
Latest UK, Eurozone and US consumer-price inflation data are due next week.
"Gold is likely to encounter repeated resistance at the $1250 mark over the coming month," says Citigroup analyst David Thurtell in a new report.
"The seasonal low period for buying in India is upon us, which will take some of the heat out of the market."
Consumer gold demand remained weak "for the fourth day running" according to the Economic Times of India, but Mumbai dealers noted that prices have eased from their record highs thanks to the strengthening Rupee.
May 2010 saw Gold Prices in all major currencies bar the Japanese Yen end with record-high monthly closes.
More typically, the Seasonal Doldrums have already begun by late-spring, with prices dipping through summer before rising again as strong demand from India – the world's No.1 private consumer – returns post-harvest.
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