Gold holds steady after weak US economic data

With the US Commerce Department saying that the US economy grew at a 1.2% annual rate in the second quarter, much less than expected

Gold remained steady on Monday, after rising over 1% to a near three-week high in the previous session, as disappointing US growth figures last week bolstered safe-haven demand.

The US Commerce Department reported on Friday that the US economy grew at a 1.2% annual rate in the second quarter, much less than expected.

Spot gold was nearly unchanged at $1,349.76 an ounce at 0343 GMT. Bullion hit a high of $1,355.10 on Friday, its highest level since July 12.

US gold was nearly flat at $1,356.9 an ounce.

"The (gold) markets will be more prudent ahead of the non-farm payrolls data due on Friday," said Jiang Shu, chief analyst at Shandong Gold Group.

"If it is going to be weak, then people will change their expectations about the US economic prospects drastically. If they are relatively good, bad GDP data could be counterbalanced by a good jobs data," added the analyst. 

Signals for spot gold were mixed and will become clearer when the metal gets out of a range of $1,346-1,357 per ounce, according to Reuters technical analyst Wang Tao.

Top US Fed policymakers held varying opinions about rate hikes, with the Dallas Fed President Robert Kaplan calling for caution, while the San Francisco Fed President John Williams expecting the central bank to raise interest rates up to two times before year end.

"The Fed will likely abstain from doing anything in September or October as that will be too early to make a move. The latest odds show a rate increase for December at roughly 45%, while September at about 18," INTL FCStone analyst Edward Meir said in a note.

A sidelined Fed between now and year-end should weaken the dollar, pushing gold to test July highs of $1,374 levels, with an outside chance of getting to $1,400, Meir added.

Hedge funds and money managers increased their net long position in COMEX silver contracts, but cut net long position in gold, in the week to July 26.

Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.40% to 958.10 tonnes on Friday.

Among other precious metals, spot silver touched a three-week high of $20.62 and was up 1.2% at $20.55.

Platinum, which hit over 14-month highs on Friday, was up 0.3% at $1,146.5 an ounce, while palladium was down 0.4% at $707. It hit over 9-1/2 month high on Friday.