* Coming Up: U.S. Federal budget for July; 1800 GMT
By Lewa Pardomuan
SINGAPORE, Aug 10 (Reuters) – Gold inched down on Friday as shares in Asia paused for breath after recent rallies, though it remained on track for its second weekly rise in three weeks, bolstered by hopes China could move to stimulate growth.
Bullion remains way below a record of around $1,920 an ounce hit in September last year, however, and has failed to revisit recent highs due to a lack of clarity on possible economic stimulus from both the U.S. Federal Reserve and European Central Bank.
But downbeat Chinese economic data has kept hopes alive that Beijing will do more to bolster growth.
Gold had fallen $3.94, or 0.24 percent, to 1613.15 an ounce by 0413 GMT, having risen slightly on Thursday after data showed Chinese factory activity slowed unexpectedly, boosting hopes for stimulus measures.
“I think people are looking for China to reduce the reserve (requirement) and then pump more money. They are hoping for weak U.S. data, and maybe QE3 will be coming in September,” said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong, referring to a third round of asset purchases by the Fed.
“The market is a bit mixed … On the physical side, there are people buying a small amount of gold, but on other hand, some are taking profits.”
U.S. gold for December eased $4.20, or 0.26 percent, to 1616 an ounce in thin trade.
Shares slipped on Friday after a four-day rally driven by optimism that authorities will soon take the steps needed to ease concerns over the euro zone’s debt crisis and weak growth.
Markets have been pinning their hopes on the possibility that the European Central Bank will start buying sovereign bonds to lower borrowing costs for Spain, and the Fed will expand its monetary easing, despite suggestions from the authorities that no steps were likely before September.
“We think the market currently lacks both fundamental and technical impetus. In the coming trading days, sideways trading is likely to extend as the data calendar for gold is light,” Credit Suisse said in a note.
Spot gold could revisit its Aug. 8, low of $1,602.94 per ounce as it has not broken resistance at $1,618, said Reuters analyst Wang Tao.
Holdings of the largest silver-backed exchange-traded-fund (ETF), New York’s iShares Silver Trust SLV and that of the largest gold-backed ETF, New York’s SPDR Gold Trust GLD, remained unchanged from Wednesday to Thursday.
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