Gold pauses after 4-day rally; investors turn cautious

SINGAPORE, April 11 (Reuters) - Gold edged lower on
Wednesday, pausing after four consecutive sessions of gains
driven by safe-haven flows on a cloudy global economic outlook,
but sentiment has turned cautious as investors  seek further
clues to growth. 
    Euphoria over a U.S. economic recovery was cut short by a
disappointing employment report that showed far slower jobs
expansion than expected, and led investors to question the
outlook for the world's largest economy. 
    "Gold is vulnerable to the next leg of risk sell-off, as it
doesn't like being the only metal to be trading higher in a sea
of red," said a Singapore-based trader. Investors tend to
liquidate gold positions to cover losses elsewhere. 
    Spot gold inched down 0.2 percent to $1,656.96 an
ounce by 0640 GMT, after hitting a one-week high of $1,662.60 on
Tuesday. U.S. gold lost 0.1 percent to $1,658.50. 
    Gold, the dollar and U.S. government debt had benefited from
the latest bout of safe-haven interest from investors, with gold
rallying more than 1 percent and U.S. Treasuries yields hitting
4-week lows in the previous session.   
    The prospect of more monetary easing, which strengthens the
outlook for higher inflation, also supports the sentiment in
gold, regarded as a hedge against rising prices. 
    "If weak data continues, the Fed will have to intervene
again to stimulate consumption," said Jeremy Friesen, commodity
strategist at Societe Generale in Hong Kong. 
    "The next couple of years will be really challenging for
global growth and central banks will be relied on as a crutch to
get us through." 
    Investors will closely watch the European government debt
market, after Spanish and Italian government debt encountered
slumping demand as investors fretted over the fragility of
peripheral euro zone economies.     
    The gold-silver ratio, used to measures the ounces of silver
to purchase an ounce of gold, rose to 52.5, the highest since
the end of January, as a result of the recent boost in gold
prices. 
     
    Hong Kong's gold exports to China rose 20 percent in
February on the month as appetite for the precious metal remains
strong in China, which is expected to overtake India as the
world's top gold consumer this year.  
    Some suspected the number could include purchases from the
public sector, as the market was largely quiet during a
post-Lunar New Year holiday slump in February. 
    "On the public level, China's central bank will continue to
accumulate gold, which is easier than liberalising their capital
account and currency," said Friesen of SocGen, adding that
building gold reserves would help China's push to turn the
renminbi into a global currency. 
    Accommodative monetary policy will remain an incentive for
private investors to buy into gold, he added. 
    Recent price gains suppressed demand in the physical market,
but India's return after a three-week strike helped support the
sentiment. 
    "There is some light buying and a bit of scrap selling,"
said Dick Poon, manager of precious metals at Heraeus in Hong
Kong. "At this point I don't think China's gold demand growth
this year will be as strong as last year, as a lot of people
prefer to keep cash rather than making an investment." 
    Spot platinum fell to $1,573.49 an ounce, its lowest
in more than two months, before regaining some lost ground to
$1,590.49, tracking losses in industrial metals and equities hit
by downbeat sentiment on global growth.   
     
      Precious metals prices 0640 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1656.96   -2.89   -0.17      5.96
  Spot Silver        31.62   -0.16   -0.50     14.19
  Spot Platinum    1590.49   -2.26   -0.14     14.18
  Spot Palladium    638.97    2.44   +0.38     -2.07
  COMEX GOLD JUN2  1658.50   -2.20   -0.13      5.85        12873
  COMEX SILVER MAY2  31.61   -0.07   -0.22     13.24         4432
  Euro/Dollar       1.3112
  Dollar/Yen         80.89
  COMEX gold and silver contracts show the most active months