* Dollar index hovers near two-year high
* Spot gold neutral between $1,564-$1,582.80/oz -technicals
* Coming up: Euro zone industrial production, May; 0900 GMT
(Adds comments, details; updates prices)
By Rujun Shen
SINGAPORE, July 12 (Reuters) – Gold edged lower on Thursday,
dropping for a fourth session out of six, as investors remained
cautious on indications the Federal Reserve was unlikely to
launch more monetary stimulus until U.S. economic conditions
weakened further.
Gold’s fortunes this year have largely depended on the Fed’s
attitude towards monetary easing and its related impact on the
dollar. The greenback and bullion typically move in opposite
directions and lately the dollar has trumped gold as the
preferred safe-haven bet.
The dollar stood close to a two-year high against a basket
of major currencies, having pushed the euro to a two-year
low after minutes from a Federal Reserve meeting dashed hopes of
policy easing moves anytime soon.
“Europe is doing badly and investors are struggling with
whether we will have QE (quantitative easing),” said Ronald
Leung, a physical dealer with Lee Cheong Gold Dealers in Hong
Kong. “As the economy slows down in China and Hong Kong, gold
consumption is also affected.”
Investors are now waiting for Friday’s GDP data from China,
one of the largest consumers of gold, for clues on the health of
the economy after latest data from the country stoked concerns
about the strength of domestic demand.
Spot gold lost 0.3 percent to $1,571.86 an ounce by
0311 GMT. Leung said physical buying emerged when prices dropped
near $1,560 in the previous session.
U.S. gold futures contract for August delivery inched
down 0.2 percent to $1,572.
Technical analysis suggested that spot gold is neutral
between $1,564 and $1,582.80, said Reuters market analyst Wang
Tao.
DOLLAR DENTS
Gold prices could remain under pressure from a strong dollar
and the lack of a clear signal on the Fed’s next move.
“We are maintaining our near-term downside bias for gold and
suggest shorting the market at $1,580, targeting $1,554, with a
stop at $1,600, given waning risk appetite and implications for
a stronger U.S. dollar, which are likely to keep downward
pressure on gold after the recent failure to maintain a rally
above $1,600,” said ANZ in a research note.
Credit Suisse cut 2012 gold price forecast to $1,680 an
ounce from its prior forecast of $1,765. Growing concerns about
debt deflation and improving growth prospects in the global
economy are the two scenarios in which gold would perform
poorly, the bank said.
The bank also lowered silver price forecast to $30.50 from
$33.50.
Spot silver inched down 0.3 percent to $26.98.
On Europe’s government debt market, yields on Spanish and
Italian bonds eased, although doubts over proposed measures to
tackle the euro zone debt crisis allowed Germany to pay a record
low average yield.
Investors will closely watch Germany’s top court’s judgment
on the EU’s bailout fund and fiscal pact, which may take months
to form.
Precious metals prices 0311 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1571.86 -3.89 -0.25 0.52
Spot Silver 26.98 -0.09 -0.33 -2.56
Spot Platinum 1417.25 -6.75 -0.47 1.74
Spot Palladium 577.25 -0.23 -0.04 -11.53
COMEX GOLD AUG2 1572.00 -3.70 -0.23 0.33 5956
COMEX SILVER SEP2 26.95 -0.07 -0.27 -3.46 1607
Euro/Dollar 1.2238
Dollar/Yen 79.49
COMEX gold and silver contracts show the most active months
(Editing by Himani Sarkar)
