Reuters/New York
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Gold prices eased yesterday as demand waned for gold-backed exchange funds and investors continued to digest the effect of wide-ranging US government spending cuts on bullion prices.
Trading was quiet as a lack of major US economic indicators and a flat US equities market yesterday failed to provide gold with a new catalyst.
Some investors remained on the sidelines, with President Barack Obama and congressional Republicans still apart on a deal to avert automatic US budget cuts. The White House ordered cuts in government spending on Friday night.
Gold, a traditional safe haven in times of economic uncertainty, is also viewed as an inflation hedge, and a major reduction in US spending has assuaged most inflation concerns.
Also weighing on investor sentiment, data showed holdings of the world’s largest gold-backed ETF the SPDR Gold Trust posted a ninth consecutive daily decline on Friday.
“February marked the largest monthly outflow across physically backed gold exchange-traded products. Continued net redemptions at this pace pose the largest downside risk to prices, in our view,” Suki Cooper, precious metals strategist at Barclays Capital, said in a note.