Gold declines, yet heading for a third weekly advance

The yellow metal retreated slightly on Friday, but still moving around one and half month high, in the absence of economic fundamentals from US and Europe.

Spot gold is trading at $1231.34 an ounce after recording a high of $1233.70 and a low of $1229.56, where it is poised for its third weekly incline this week, the best pace of rise since June.

Gold firmed over the past three weeks on worries global economic recovery is slowing down.

The previous day, US initial jobless claims increased to 500 thousands from 488 thousands, the highest level since November.

Also, the Bundesbank has raised growth forecasts for the current year the Germany economy to 3.0% from the previous 1.9% estimated in June, but referred that the progress would continue in the second six months but at a normal rate.

Yesterday, gold added $3.10 or 0.25% to close at $1231.96 an ounce. Gold Price was setin London on Thursday at $1233.50 per ounce during the PM fixing declining from $1228.00 during the AM fixing. SPDR gold trust, the world's largest exchange-traded fund backed by bullion, surged 3.95 metric tons to 1,299.47 on August 19.

Nevertheless, the metal is facing some downside pressure stemming from weak physical buying, profit taking and the dollar's rise versus majors.

The Stochastic Oscillator momentum indicator is showing that gold is currently overbought which may encourage profit taking by investors.

In addition, the dollar strengthened against a basket of major currencies as depicted by the dollar index which rose to 82.52 compared with yesterday's closing at 82.44.

Moreover, oil prices plummeted to $74.40 a barrel from the day's opening at $75.20 taking a cue from the decline in Asian shares.

Among other precious metals, platinum slipped to $1513.50 from $1515.70 on Wednesday; palladium lingered $480.10; and silver remained at $18.28, as of 08:20 GMT.