A modest uptick in US inflation encouraged some light buying of gold Friday, but the mood remained cautious as debate rages over the US Federal Reserve’s next move.
Inflation is seen as helpful for gold, as it devalues paper currencies, and US factory gate inflation rising more than expected in May served as a reminder that it may yet become a problem.
Spot gold was a few cents higher at US$1,386.10, but has made little or no progress over the week despite the additional boost of the turmoil in equity markets sparked by Japan.
Meanwhile, India continued its attempts to discourage retail buying with finance minister the latest government official to urge the country’s population not to buy gold.
India accounts for 28% of global consumer demand according to the World Gold Council. It estimates Indian gold imports could rise to 400t in the latest three months, up from 257t in the first quarter and equal to almost half of the total for for the whole of 2012.
Elsewhere, platinum has had a poor week despite strong demand for the newest platinum-backed exchange traded fund.
According to broker Investec the NewPlat ETF, launched by Absa Capital in late April and which already accounts for around 20% of total global platinum ETF holdings, saw its holding rise by 4.3% on Thursday.
The broker suggests this is down to investors switching out of platinum miners and into direct exposure to the metal itself through the ETF.
"The rapid growth of this fund has been astounding as investors, recognising the issues facing platinum supply, clearly seek to gain exposure to the metal in preference to the equities, most of which have fared poorly over the same time period," Investec said in a note on Friday.
Platinum shed US$7 to US$1.444 while silver rose to US$22.06.
Major movers
Randgold Resources up 113p to 4,872p
Fresnillo up 22p at 1,105p
Anglo American up 30p at 1,430p