Gold set for the third weekly drop

Gold rebounded to $1347.00 after yesterday's sharp drop, yet heading for the third weekly decline on improvement in Chinese and US data which lowered the appeal of the metal as a safe haven asset.

The previous session, gold shed $24.90 or 1.82% to close at $1345.87, while gold price was setin London at $1345.50 per ounce declining from $1364.50 during the AM fixing.

For the week, gold opened at $1360.95 an ounce and reached a high at $1378.94 and a low of $1343.29.

Yesterday, Chinese growth accelerated 9.8% in the fourth quarter along with the improvement in industrial production and retail sales, while in the US jobless benefits and existing homes sales beat analyst's estimations, providing hopes the two giant economies will lead recovery this year.

The progress in China's data along with high inflation are increasing speculations the central bank will raise interest rate, whereas the Fed is expected to keep borrowing cost unchanged next week.

In the euro area, debt woes eased giving the chance for the euro to rise after Moody's mentioned yesterday that Portugal's export performance is good, which increased possibilities the debt-mired nation will not be downgraded.

Later in the day, eyes will be on the German business confidence and UK retail sales.

Moreover, gold is still getting some direction from the dollar but not as strong as before as both are bracing for another weekly decline.

The dollar index, which tracks the dollar movements versus a basket of major currencies, slipped to a low of 78.54 from the day's opening at 78.82 after advancing yesterday on better-than-forecasted US figures.

Oil, on the other hand, it is also preparing for a weekly decline after dropping sharply yesterday, yet it is currently showing slight rise.

On the physical side, Russia's central bank is looking forward to increasing its reserves of gold after adding holdings in December.

Among other precious metals, platinum edged down to $1806.00 from the day's opening at $1808.00, palladium inched up to $805.00 from $803.50 and silver plummeted to $27.29 from $27.39, as of 08:00 GMT.