Gold Set For First Weekly Slide In Four

Gold held steady early Friday, but was set to post its first weekly slump in four as better-than-expected data from the world’s largest economy offset the metal’s safe-haven appeal.

The sideway trade remains evident in the bullion market, and expected to be so in the near term, after a raft of US data signaled the US economy is adding momentum, fueling fears the Federal Reserve will continue tapering its monetary stimulus. On the physical side, good demand from the China, continues to have a negative impact on the investment climate.

Spot Gold was nearly flat at $1,241.00 an ounce as of 03:09 EST, little changed from yesterday’s close at $1,241.29. Today’s range is so far between $1,239.77 and $1,244.72.

Among other precious metals:

Spot Silver -0.25% at $20.05 an ounce

Spot Platinum +0.35% at $1,434.50 an ounce

Spot Palladium +0.03% at $742.95 an ounce

The Fed stimulus outlook is the main driver of yellow metal’s bearish outlook. The dollar enjoys a rebound against majors, equities rallied to a record muting inflation, as Fed policy makers said last month they will reduce bond purchases to $75 billion from $85 billion.

The metal lost more than a quarter of its value in 2013, a sign that investors have lost their faith in gold as a safe.

Yesterday’s economic news was mixed, led by another soft consumer price report that points for increased price pressures, but the upbeat tone offered by the labor market kept the led on gold. The weekly jobless claims report showed that the number of Americans filing for unemployment benefits fell for the second week in a row last week.

The reports dimmed demand for gold as an alternative investment in favor of the US currency, which was boosted in the past couple of days by the Fed’s Beige book, where the economy is described as improving.

Hitting a positive note for dollar as well was the latest reports on manufacturing, with the Philly Fed pointing to rising output and employment in the region’s manufacturing sector. A day earlier, the Empire State report showed a sizable improvement in the New York manufacturing region.

The USIDX, which tracks the performance of the greenback against the six-currency basket, rose 0.15% to 81.14 as of 08:39 GMT.

The bullion market will be eager to take fresh clues about the Fed’s policy from the January FOMC meeting, given the disappointing 74-thousand non-farm payroll (NFP) number in the December jobs report, which rudely trailed analyst’s median estimate of 215 thousand.

Technically, we prefere to remain on the sidelines today while the metal trades below $1,250 for the fourth day now, but breaking below the key resistance level at $1,244.50 will likely underpin the downside move.