Gold holds below $1,590 after upbeat US data

Gold steadied just below US$1,590 an ounce early on Thursday after slipping in the previous session when upbeat US retail sales strengthened the outlook for the world's top economy and dampened bullion's safe-haven appeal.

Spot gold was little changed at US$1,586.34 an ounce by 0409 GMT. Indications that the global economy, led by recent positive data from the United States, is on a better footing this year has driven investors away from gold, with spot prices down 5 percent this year.

US gold was similarly steady at US$1,585.50 an ounce in midday trade.

"We already initiated a sell gold recommendation last December," said Henry Liu, head of commodity research at Mirae Asset Securities in Hong Kong.

"As long as the US economy is coming back we do not think gold prices can rise."

The US dollar hovered near seven-month highs against a basket of currencies on Thursday after bullish US retail sales data fanned hopes the economy can cope with the tax hikes and spending cuts that kicked in this year. 

US retail sales expanded at their fastest pace in five months in February, the latest sign of momentum for an economy facing headwinds from higher taxes and pricier gasoline.

But output at factories in the euro zone fell more than expected at the start of 2013 and production in France and Germany slipped in the latest sign the bloc is struggling to emerge from recession.

Reflecting a lack of conviction in the gold market, holdings of the largest gold-backed exchange-traded-fund, New York's SPDR Gold Trust were little changed on Tuesday from Monday, while that of the largest silver-backed ETF, New York's iShares Silver Trust SLV rose half a percent.

"We think gold lacks both technical momentum and investment interest to recover significantly from current levels," Credit Suisse said in a client note.