SINGAPORE, Feb 23 (Reuters) - Spot gold edged lower on
Thursday, taking a breather after hitting a three-month high in
the previous session, while sentiment remains supported on hopes
of further monetary easing after sluggish economic data from the
euro zone and China.	
    Data showed unexpectedly weak activity in the euro zone,
while China's manufacturing sector contracted for the fourth
straight month, fueling anticipations that central banks will
further ease monetary policy to promote economic growth.
  	
    Gold benefits from loose monetary policy, as abundant credit
keeps the opportunity cost of carrying gold low. In addition,
higher inflation outlook caused by a flood of cheap cash
burnishes the appeal of gold, traditionally seen as a good hedge
against inflation.	
    "There is always a case to be made for gold, as long as the
central banks keep taking new easing measures or keep indicating
they will take more new measures down the road," said a
Singapore-based trader.	
    He said that the weak numbers of out China added to the
argument that more easing will be adopted by Beijing.	
    Spot gold edged down 0.1 percent to $1,773.89 an
ounce by 0338 GMT, after three consecutive days of gains. 	
    U.S. gold inched up 0.3 percent to $1,775.80 an
ounce.	
    Technical signals were also supportive of gold's strength.
Chart analysis suggested that spot gold could extend gains to
$1,797 an ounce during the day, Reuters market analyst Wang Tao
said. 	
    	
    Scrap selling was spotted from Thailand and Indonesia, while
buying from China and India remained muted, dealers in Hong Kong
and Singapore said.	
    	
    PLATINUM RALLY MAY PROVE SHORT-LIVED	
    Spot platinum hit a five-month high of $1,726.5 an
ounce earlier in the day, before retracing to $1,715.49 an
ounce, down 0.3 percent from the previous close.	
    Prices of the metal, mainly used in jewellery and automotive
sectors, rallied about 5 percent this week on chart strength and
supply woes in South Africa. 	
    But technical analysis suggested that platinum might be
running out of steam in the short run.	
    "Bullishness on breaking the 200-day moving average may
prove short-lived," said Tim Riddell, head of ANZ Global Markets
Research, Asia.	
    The breakthrough fuelled expectations that platinum could
move towards $1,790, the centre of the predominant trading range
in the first three quarters of 2011, but it may be just
completing a broad cycle from the December low below $1,340, he
added.	
    "What it means is that the current bullish expectations
about breaking moving average needs to be tempered and any
slippage below $1,690 could trigger disappointment and a sharp
retracement to $1,570-$1,600 areas."	
    	
      Precious metals prices 0338 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1773.89   -1.90   -0.11     13.43
  Spot Silver        34.26   -0.01   -0.03     23.73
  Spot Platinum    1715.49   -4.50   -0.26     23.15
  Spot Palladium    718.00   -0.88   -0.12     10.04
  COMEX GOLD APR2  1775.80    4.50   +0.25     13.34         9957
  COMEX SILVER MAR2  34.27    0.02   +0.05     22.77         1951
  Euro/Dollar       1.3253
  Dollar/Yen         80.12

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