Spot gold held steady on Monday, with prices hovering below $US1360 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.
Egypt's generals are asserting their command over the country following the overthrow of President Hosni Mubarak.
Having suspended the constitution and dissolved parliament on Sunday, moves welcomed by those who saw both institutions as perverted to Mubarak's personal ends, the armed forces council was planning to issue orders intended to stifle further disruption and get the country back to work.
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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.
"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 was little changed at $US1357.25 an ounce in Asian trade this afternoon. US gold futures edged down 0.2 per cent at $US1357.80.
A bullish target for spot gold of $US1388 per ounce has been aborted as it failed to touch a new high on Friday, making likely a further drop towards $US1333, 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.
‘‘Gold is stuck in the range of $US1345 to $US1370," said Peter Fung, head of dealing department at Wing Fung Precious Metals in Hong Kong. "We are not seeing much physical interest after the Chinese returned from the Lunar New Year holiday, and the premiums in Shanghai are lower than before the holiday."
Fung said the lack of direction in the market contributed to the listless trading activities.
"People don't see any trend in the short term, and have little interest in trading."
Premiums for gold in Singapore have fallen to about $US1 per ounce over London prices, from $US1.50/$US1.90 last week, as demand ebbed from before the Lunar New Year and supply tightness eased.
"As interest rates are turning more hawkish, opportunity cost of having gold is higher now," said a Singapore-based trader.
