Gold on track for second weekly gain on safe-haven demand

Reuters
Gold bars are stacked in safe deposit boxes room of the ProAurum gold house in Munich
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Gold bars are stacked in the safe deposit boxes room of the Pro Aurum gold house in Munich March 3, 2014. REUTERS/Michael Dalder/Files

By A. Ananthalakshmi

SINGAPORE (Reuters) - Gold traded firmly above $1,300 an ounce on Friday and looked poised for a second-straight weekly gain as sluggish global economic data and geopolitical tensions boosted the metal's safe-haven appeal.

Bullion was helped by data on Thursday that showed the number of Americans filing new claims for unemployment benefits rose more than expected last week, while eurozone economic growth ground to a halt in the second quarter as Germany's economy shrank and France's stagnated.

Tensions over Ukraine and in the Middle East also boosted gold, seen as an alternative investment to riskier assets such as equities.

"Gold will be well-supported above $1,300 on underlying geopolitical tensions. Some weak data in the last few days is also helping," said a precious metals trader.

"But if equity markets take off, prices could dip as there is no other support from physical markets or inflows into exchange-traded funds."

Spot gold edged up 0.1 percent to $1,314 an ounce by 0629 GMT, after closing little changed in the previous session. The metal has gained 0.4 percent this week.

U.S. gold slipped 50 cents to $1,315.20, also on track for a second weekly gain.

While investment demand for gold has recently been boosted by conflicts, physical demand for the metal remains weak.

Global gold demand fell 16 percent in the second quarter, according to a World Gold Council report on Thursday.

Demand in top buyers China and India has been particularly weak, with consumption dropping by about 50 and 40 percent, respectively, from a strong year-ago period.

Hedge fund Paulson & Co maintained its stake in the world's biggest gold-backed exchange-traded fund, SPDR Gold Trust, in the second quarter, while Soros Fund Management LLC sharply boosted its investment in gold mining stocks.

Among other precious metals, silver was headed for its fifth consecutive weekly loss.

The silver market enters a new electronic era in benchmarking on Friday after a regulatory drive for more transparency in price setting brought the 117-year-old silver 'fix' to an end.

(Reporting by A. Ananthalakshmi; Editing by Joseph Radford and Biju Dwarakanath)

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