Gold turns up to score fourth session gain in a row

SAN FRANCISCO (MarketWatch) — Gold futures on Thursday settled with a modest gain, as a pullback in U.S. equities helped provide some investment appeal for the precious metal.

Pressure remained on copper prices after a batch of downbeat China data.

Gold for April delivery GCJ4 +0.18%   rose $1.90, or 0.1%, to settle at $1,372.40 an ounce on the Comex division of the New York Mercantile Exchange. Prices tallied their four-straight session gain and held their ground at a six-month closing high.

The equities “market decline is causing a flight to perceived safety in the physical metal,” said Adam Koos, president of Libertas Wealth Management Group. “Gold tends to perform better at times of higher volatility and when the stock market struggles.”

Earlier, prices for the yellow metal earlier had dropped to as low as $1,364.90 when U.S. equities traded higher on the back of a fall in weekly U.S. jobless claims and a rise in monthly retail sales. Gold then found support as equities reversed course, apparently pressured by the escalation of conflict between Ukraine and Russia and downbeat economic data from China.

Chinese data showed that for the January-February period, industrial output and retail sales each rose less than expected.

China is the second-biggest economy of the world and “therefore a slowdown in the economic activity in China is a risk for global growth — and this is what is inflating the gold price,” said Naeem Aslam, chief market analyst at AvaTrade.

May silver SIK4 -0.60%   continued its descent, closing 16 cents, or 0.8%, lower at $21.20 an ounce.

Weekly jobless claims dropped to a three-month low of 315,000, which was more of an improvement than the drop to 330,000 that was expected.

Also Thursday, data showed that U.S. retail sales rose 0.3% in February, the first gain in three months, and beating expectations for a gain of 0.2%.

Jobless claims, retail sales higher than expected.

“Better-than-expected U.S. February retail sale numbers should have resulted in gold prices falling by at least $20 from the high of $1,375.70 [on Comex ], which has not been the case,” said Chintan Karnani, chief market analyst at Insignia Consultants in New Delhi. “This suggests that traders are cautious going short in gold and/or reflects [the] dual mindset of traders.”

“Ukraine is a big factor which is preventing gold prices from falling,” he said, but on a technical level, “unless gold prices trades over $1,376, I am against going long in gold at the current price of $1,365.90.”

On Wednesday, gold keyed off weakness in equities to push to levels not seen since September, boosted by tensions in Ukraine and concerns over a slowdown in China’s economy. Gold was holding at six-month highs until just ahead of Thursday morning’s U.S. data. Faber sees China growth at 4% — good news for its ‘gigantic bubble’.

Looking ahead, Edward Meir of INTL FCStone said he expects gold to keep the upward momentum in light of what we’re seeing on the economic and political landscape. He added that technicals could kick in for an added tailwind if the current gains in Asia sustain themselves.

“Moreover, we expect some length to also materialize heading into the critical weekend, when all eyes will be on the Crimean poll results,” he said.

Copper holds below $3

Meanwhile, copper was further undermined Thursday after Chinese data revealed disappointing numbers on the industrial production and retail sales side, with some analysts saying the data means the China 7.5% growth number will be hard to meet, while others downplayed its significance .

Data showed that China’s industrial output for the January-February period was up 8.6% from a year earlier, compared to expectations for a 9.5% gain reported by Dow Jones Newswires. Retail sales were up 11.8% compared with a year earlier, missing a forecast for a 13.5% gain.

High-grade copper for May delivery HGK4 -1.47%   closed at $2.92 a pound, down 4 cents, or 1.3%.

The metal, hard hit by worries about the Chinese economy, is hovering at levels not seen since mid-2010, based on the most-active contracts, and has lost around 14% year to date, the worst performer among precious or base metals. For the week, prices have declined about 5%.

Also Comex Thursday, platinum group metals settled with slight gains for the session. April platinum PLJ4 +0.18%  added $3.10, or 0.2%, to $1,479.40 an ounce, while June palladium PAM4 +0.03%   lost $1.80, or 0.2%, to $778.95 an ounce.

Metals-mining shares tracked gains in gold prices Thursday afternoon, with the Philadelphia Gold and Silver Index XAU +2.07%   up 2.3%. The SPDR Gold Trust GLD +0.51%   added 0.4%.