The gold price returned above the key psychological level of $1,150 on Thursday morning when the dollar’s rapid advance was briefly disrupted.
Spot gold was last at $1,158.80/1,159.60 per ounce, up $4 on Wednesday’s close after marginally avoiding its lowest in fourth months in the previous session.
“I don’t believe this is the beginning of a major turnaround, but there has to come a point when a market that has been going steadily in one direction, is due a correction of some sort,” Marex Spectron’s David Govett said in a note.
“This we are seeing this morning and that coupled with the fact that gold was pushed below $1,150 and held well on a couple of occasions has prompted buying,” he added.
The dollar’s surge towards parity against the euro was checked this morning – it has retreated slightly from the fresh 12-year high of 1.0494 hit earlier in the session and was last at 1.0602.
“I said yesterday that I was looking for gold to range between $1,150 and $1,175 and I stick with that for the moment. I still believe that the dollar will resume its upward trajectory at some point and this in turn will pressure the precious,” Govett added.
Muted support from the physical markets out of China this morning adds further weight to the argument that buyers are expecting further price falls. The local spot premium remains punchy at $4 but observers suggest that appetite is still far from healthy, exacerbated by March being traditionally quieter for physical demand.
In data today out of China, new loans in February at 1.02 trillion yuan (around $162.8 billion) exceeded forecasts of 755 billion yuan. Following loans of 1.47 trillion yuan in January, this is a surge in lending to levels not seen since 2009.
M2 money supply in February rose 12.5 percent from a year ago, also bettering consensus at 11.1 percent.
Out of the eurozone, the French CPI outperformed at 0.7 percent thanks to a surge in prices of manufactured products following winter sales. The German figure was largely in line with forecasts at 0.9 percent, while industrial production at -0.1 percent fell short of the predicted 0.3 percent.
Still to come today out of the US are retail sales figures, import prices and weekly unemployment claims.
In other metals, silver came off three-month lows and was last 14 cents higher at $15.61/15.66 per ounce, while platinum climbed $8 from six-year lows to $1,125/1,130 and palladium was up $9 at $794/800.
(Editing by Mark Shaw)