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Singapore - Gold was on track for the first weekly drop since May as risk appetite returned and investors turned away from haven assets including bullion and the yen amid record highs for US shares.
Bullion for immediate delivery fell as much as 0.7% to $1 326.60 an ounce and was at $1 332 at 2:44 p.m. in Singapore, according to Bloomberg generic pricing.
The metal is down 2.5% this week and is holding just above the 20-day moving average of about $1 325. Silver futures in Shanghai headed for a sixth weekly gain, the longest winning run in two years.
Gold has rallied this year as investors sought a store of value amid turmoil in financial markets following the UK’s vote to leave the European Union and concerns over the strength of the global economy.
The gains were cut this week as prospects for additional stimulus from governments and central banks lifted equities, leaving gold near a two-week low and the yen on course for its worst week since 1999.
The pound extended gains after the Bank of England unexpectedly stood pat on interest rates.
"Equities markets have done well so far," Brian Lan, managing director of Singapore-based GoldSilver Central Pte, said in an e-mail.
"Capital is flowing back to equities at the moment and also currencies as shown in the UK. When the BOE decided to keep interest rates the same, sterling pounds benefited."
Investors will be scrutinizing US data before the Federal Reserve’s next policy-setting panel meeting on July 26 to 27 to gauge the strength of the economy.
Releases due on Friday include gauges of household spending, inflation, industrial production and consumer confidence.
"Gold prices might be further tested if tonight’s data from the US, particularly the retail sales data, is better than expected," Lan said. "This will again bring out the speculation of a rate hike from the Fed."
Investors see only a 6% probability of a rate increase this month, according to pricing in Fed funds futures contracts, though the chances of a move in September have rebounded to 19% - compared with just 2% at the start of the month - with December viewed as a 35% bet. Higher rates damp the appeal of bullion which doesn’t pay interest.
In other metals, silver imports by India are set to plunge from last year’s record as jewellers grapple with slowing demand and excessive inventories after domestic prices climbed to the highest levels since 2013, according to Metals Focus.
Holdings in gold-backed exchange-traded funds fell 2.1 metric tonnes to 2 001 tonnes on Thursday, data compiled by Bloomberg show.
In China, bullion of 99.99% purity lost 0.2% to 286.90 yuan a gram ($1 335.20 an ounce) on the Shanghai Gold Exchange.
Silver for December delivery fell 0.6% to 4 465 yuan a kilogram ($20.7775 an ounce) on the Shanghai Futures Exchange, paring the weekly gain.
Spot silver lost 0.5% and platinum dropped 0.5%. Palladium fell 0.4% to trim its weekly gain to 5%.
