Spot gold held steady on Monday, with prices hovering below $1,360 an ounce, as investors awaited China inflation data for trading cues after the resignation of Egypt's president following weeks of protest took some heat out of risk aversion. Gold prices, which have been buoyed by the turmoil in Egypt, may get a further boost if China's reports a high inflation number.
Economists polled by Reuters have pegged China's January inflation rising at a 30-month high. The China inflation data will follow an 8.23-percent annual rise in January headline inflation in India, the world's biggest gold consumer. "China's inflation number is something to watch out for. If the number is high, it may cause another move up in gold prices, because people would use gold as hedge against inflation," said a Singapore-based dealer. But a stronger-than-expected rise in inflation may trigger fears of more tightening, after China raised interest rates twice in just over six weeks.
Spot gold edged up 0.2 percent at $1,359.20 an ounce by 0627 GMT. US gold futures was little changed at $1,359.9. A bullish target for spot gold of $1,388 per ounce has been aborted as it failed to touch a new high on Friday, making likely a further drop towards $1,333, said Wang Tao, a Reuters market analyst.
Physical market activity was subdued, as Chinese buyers had yet to jump in to the market as expected. Premiums for gold in Singapore have fallen to about $1 per ounce over London prices, from $1.50/$1.90 last week, as demand ebbed from before the Lunar New Year and supply tightness eased. Spot platinum gained more than one percent to $1,822.75, after falling to a 1-1/2 week low of $1,796.45 on Friday. Spot palladium rose by 0.6 percent to $816.
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