Gold eased for a second straight session on Thursday as investors awaited US jobless claims data for possible cues, and the sentiment remained fragile as optimism over an economic recovery and a strong dollar dented the bullion’s appeal as a hedge.

More outflows from bullion-backed exchange-traded funds indicated that investors anticipate further price falls as the dollar stays close to a four-year peak against a basket of major currencies.

Spot gold

Spot gold slipped 0.2 per cent to $1,157.73 an ounce at 0735 GMT, after easing 0.3 per cent in the session before. The metal has seen an intense sell-off since October 31, sliding below the key technical level of $1,180 and then plumbing to a 4-1/2-year low of $1,131.85. It has since recovered modestly on short-covering.

“I think the market will consolidate at this level, we could go up a bit but not far,’’ said a trader in Shanghai.

“The support at $1,180 has become a key resistance level. It has been a quiet week on the data side, but today’s US data could provide some trigger.’’

US economy

US weekly jobless claims are expected later in the day, and could provide clues about the strength of the economy. The recovery is being closely tracked as it would influence the US Federal Reserve’s decision to increase interest rates.

Higher rates could hurt non-interest-bearing gold and boost the dollar. Bullion, seen as an alternative investment to riskier assets during economic uncertainty, tends to fall when the dollar and equities are strong.

Holdings in SPDR gold trust

Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.25 per cent to 722.67 tonnes on Wednesday - the seventh straight day of declines. The holdings are also the lowest in six years. The ETF is seen as a good reflection of market sentiment due to its size.

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