Gold shines again despite ETF outflows Gold continued its recovery, edging higher for the second week in a row despite outflows from exchange traded funds. The precious metal made several attempts at breaking through the technical $1,600 a troy ounce level over the past few days, and it was trading at $1,594.01 a troy ounce on Friday, up 1 per cent on the week. Analysts said sentiment had improved from last month, when the market hit this year's low of $1,554.49 a troy ounce. Physical demand from Asia, especially China, was providing a floor for the precious metal, although there was still uncertainty over the direction for the market, they said. Investors are waiting for clearer direction. The market needs a powerful catalyst to serve as a signal for investors to act," said Joni Teves, analyst at UBS, one of the leading bullion banks in London. She added that a third of the bank's clients saw gold above the $1,700 a troy ounce level in three months, while a few expect prices to fall below $1,500 in the same timeframe. With the bulk of investors unsure of what direction the precious metal's price will take, "anticipate continuation of range trading in the near term," said Ms Teves. On Friday US consumer price numbers, which were slightly higher than expected, provided support for gold, which is regarded by some as protection against inflation. The US CPI figures for February rose 0.7 per cent, the most since June 2009, after a flat reading in January, compared with estimates of a 0.5 per cent increase. The yellow metal failed to rise above the $1,600 level, hitting a high of $1,598.20 a troy ounce. The gold price has been capped by selling by investors liquidating their gold ETF holdings. In the week to March 14, gold ETF holdings fell by 330,000 ounces to 83.9m ounces, according to UBS. The most popular SPDR holdings saw liquidations at 217,000 ounces. Nevertheless, ETF-related selling had slowed substantially. The final week in February saw 996,000 ounces of gold liquidated followed by 641,000 ounces last week, said Standard Bank. The bank's analyst, Walter de Wet, said the two dominant drivers for gold were real interest rates and global liquidity. "We believe that the ETF liquidation will stop," he said. Mr De Wet noted the value of holding a bearish position on gold had "declined substantially" since "the largest part of the decline in the gold price has taken place already." With Standard Bank's fair value estimate for gold at $1,760 a troy ounce, he advised "considering a long position for gold on approach of $1,550."