Gold steadies near five-month low, US data eyed

Tags: Gold, Commodities
Gold steadied on Wednesday after striking a 5-month low in the previous session, with

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investors awaiting more U.S. data to see whether a reduction in the Federal Reserve's monetary stimulus is likely this month, which would reduce gold's attraction as a hedge against inflation.

Spot gold had eased 0.2 percent to $1,221.64 an ounce by 0325 GMT. It traded in a narrow range on Tuesday slipping to $1,215.60 - fresh lows since early July - despite weakness in equities and the U.S. dollar.

Analysts say prices are set to decline further, most likely below $1,200 an ounce as there are no supporting factors.

"The failure to go any higher than $1,226 per ounce (in the previous session) despite a weaker dollar is yet another sign of weakness," said Joyce Liu, investment analyst at Phillip Futures Pte Ltd.

"Prices are likely to continue trading in a tight range below $1,226. There is a lack of support at least until $1,195."

Strong U.S. manufacturing data sent the metal down sharply earlier this week as markets believe a recovering economy would prompt the Fed to slow down the pace of its $85 billion in monthly bond purchases.

Data on U.S. GDP and nonfarm payrolls is expected later this week and should provide clues about the stimulus outlook just ahead of the Fed's next policy meeting in December 17-18.

The Fed's money-printing for bond purchases has

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