Gold inched higher on Thursday as weak economic data rekindled global growth fears, while bullion’s recovery from four-month lows and an improved technical picture prompted some investors to cover their short positions.
Spot gold was 0.2 percent higher at $1,277.56 per ounce. U.S. gold futures were steady at $1,279.50 an ounce.
World equity markets slipped as a surprise deterioration in German and South Korean economic data brought back to the fore concerns about a global downturn.
“The correction in (stock) markets has provided some support for gold. But, the (gold) market is still looking for catalysts for a significant move and there is not much momentum in either direction,” said Capital Economics analyst Ross Strachan.
“Gold is awaiting bigger developments. We have got U.S. GDP and that’s expected to have a significant impact on the dollar.”
U.S. GDP data will be released on Friday, with the economy forecast to have grown 2.1 percent in the first quarter.
Gold prices have recovered after hitting a four-month low of $1,265.90 an ounce earlier this week, despite expectations that prices could fall towards the 200-day moving average around $1,251, analysts said.
“Gold prices are showing some resilience here. We haven’t managed to see an extension to the technical breakout we saw this week,” said Ole Hansen, commodity strategist at Saxo Bank.
“The fact that we have managed to recover and find bids is making some shorts nervous and that is providing some support right now. The correction in global markets is also just adding to the equation.”
Data from the U.S. Commodity Futures Trading Commission, showed speculators had switched to a net short position in COMEX gold in the week to April 16.
The bearish sentiment in gold was also reflected in holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund. Holdings dipped 0.2 percent to 747.87 tonnes on Wednesday, the lowest since Oct. 19.
Spot gold may bounce towards resistance at $1,284, as it has found support at $1,264, according to Reuters technical analyst Wang Tao.
Elsewhere, silver fell 0.1 percent to $14.90 an ounce, while platinum climbed 0.6 percent to $883.61
Palladium dipped 0.1 percent to $1,416.57 an ounce.