Cutting spending, hiking taxes, and no qualms about buying gold…

Gold up on central bank buying talk but outlook weak

By Frank Tang and Amanda Cooper

Three weeks of upbeat U.S. data have made investors more confident about the economy and less eager to hold gold as insurance against another slowdown. The resulting steep rise in benchmark 10-year U.S. Treasury yields has weighed on gold.

Central banks have also reportedly been active buyers of gold in recent weeks, having bought as much as 4 metric tons of metal, according to an industry source and theFinancial Times on Friday.

They were net buyers of gold last year for a second straight year with a 439.7 tonnes purchase in 2011. In the two decades prior to 2010, central banks as a group had consistently been net sellers of gold. Analysts said that talk of official-sector gold buying should bolster investor confidence as central banks tend to be very long-term owners of the precious metal.