Comex Gold Floats Near Unchanged

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"Weaker economic data was counterbalanced by investors booking profits."

Comex gold held steady Wednesday as weaker-than-expected U.S. economic data was counterbalanced by investors booking profits.

The most actively traded contract, for April delivery, was recently down 0.2%, or $2, at $1,372.10 per troy ounce on the Comex division of the New York Mercantile Exchange.

The thinly traded February-delivery contract was down 0.2%, or $2, at $1,371.60 per troy ounce.

Weaker-than-expected January industrial production data buoyed gold prices Wednesday. Industrial output dipped 0.1% last month, versus an expected 0.5% rise. Meanwhile, capacity utilization fell to 76.1 from a revised 76.2% in December. Economists forecast a rise to 76.3%.

"Disappointing industrial production and capacity utilization numbers could cause investors to question the strength of the U.S. recovery, and consequently move to the safety of precious metals," Marc Ground, analyst at Standard Bank, said in a note to clients.

Gold bulls also got a boost from the closely watched core producer prices, released as part of the U.S. Labor Department's producer price index for January. Core prices, which strip out volatile food and energy items and are considered a more reliable indicator of inflation, increased 0.5% in January, more than the 0.2% rise expected by economists.

While the increase in inflation remains modest, market participants keep a close eye on the data for signs of a pick up, which would benefit safe-harbor assets like gold.

Investors have long worried that the Federal Reserve's loose monetary policy, which has seen the bank keep interest rates near zero and pump additional liquidity into the economy in a bid to boost growth, could lead to high inflation.

But mild selling pressure kept gold from making a more pronounced step up. With gold futures inching up to their highest settlement level in four weeks Tuesday, traders moved to cash in recent profits.

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