Gold traded little changed on Friday following a sharp sell-off in the previous session after U.S. central bank chief gave no hint on imminent stimulus, disappointing investors and dampening gold's appeal as a hedgeagainst monetary easing.

 

Spot gold was nearly flat at $1,588.06 an ounce by 0023 GMT, on course for a weekly decline of more than 2 percent. It dropped nearly 2 percent in the previous session.U.S. Gold futures contract for August delivery edged up 0.1 percent to $1,589.70.U.S.

 

Federal Reserve Chairman Ben Bernanke disappointed gold bugs on Thursday by offering few clues that further monetary easing was imminent, but said the central bank was ready to shield the economy if financial troubles mount. China announced a surprise interest rate cut to combat faltering growth, underlining concern among policymakers worldwide that the euro zone's deepening crisis is threatening the health of the global economy.

 

Chancellor Angela Merkel said Europe was ready to act toensure stability in the euro zone as Spain's credit rating was cut by three notches on Thursday amid expectations it may soon seek EU help for banks beset by bad debts. The Fitch downgrade came after a better-than-expected Spanish bond auction, which helped push 10-year Spanish yields back down to 6 percent.