PRECIOUS-Gold down but off session low as euro cuts losses

Tue Nov 1, 2011 5:05pm EDT

* Slower US manufacturing gains help euro, therefore gold
    * Reports of no Greek referendum
    * Earlier gold eased as Greece, MF Global boost dollar
    * ETF flows remain gold-supportive

    By Carole Vaporean and Amanda Cooper
    NEW YORK/LONDON, Nov 1 (Reuters) - Gold traded lower on
Tuesday, under pressure from a stronger dollar, but weak U.S.
manufacturing data enabled the euro to claw back some lost
ground, pulling bullion up from earlier losses as well.
    When gold began to bounce up off session lows, a bout of
short-covering boosted it further. Gold retraced more losses as
the euro got a boost from a Dow Jones report about mounting
opposition among Greek lawmakers to the referendum.
    The Greek government reaffirmed that the vote would take
place, which knocked the euro back a bit but gold held its
ground.
    James Steel, metals analyst and senior vice president at
HSBC in New York, said the report about opposition to the
referendum "was the turning point. It was more significant than
the manufacturing data. The market grabbed onto that news and
it helped gold cut losses along with a bit of short covering."
    Fallout from the collapse of failed broker MF Global
Holdings Ltd also rippled through global markets.
    Late on Monday, Greece's Papandreou called an unexpected
referendum on the EU bailout deal for his debt-ridden country.
Rejection of the deal by Greek citizens could lead to a
disorderly default by Greece on its debt.
    On Tuesday, gold curbed some losses after French President
Nicolas Sarkozy and German Chancellor Angela Merkel in a phone
conversation agreed that they were committed to last week's EU
decisions.
    Spot gold was quoted at $1,719.39 an ounce by 3:33
p.m. EDT (1933 GMT), up from a $1,713.95 closing bid on Monday
and well up from a session low of $1,681.74 an ounce.
    COMEX benchmark December gold finished down $13.40
per ounce at $1,711.80, but pared that decline to $1,720.50, a
$4.70 per ounce drop, in after hours trade in New York.
    Germany and France said they were determined to fully
implement the decisions taken at last week's European Union
summit, which further supported the single European currency.
    "This type of plunging dysthymia pushes everyone back to
cash and maybe bonds. It will pass soon enough and today's
metal prices will look cheap by as early as next week," said
John Howlett, Division Vice President at Mitsubishi
International Corporation's Bullion Daily Report in New York.
    MF Global failed to protect customer accounts by keeping
them separate from the firm's funds, a top U.S. regulator said,
as administrators to the collapsed brokerage's UK arm scrambled
to close out billions of dollars worth of client positions.
    "At the moment gold price is caught between dollar weakness
and the need for liquidity amid heightened uncertainty," said
Barclays Capital analyst Suki Cooper.
    The euro trimmed losses against the dollar after the
Institute for Supply Management said its index of national U.S.
factory activity dipped to 50.8 from 51.6 the month before,
below forecasts for an improvement to 52.0.
    GOLD SUPPORT
    Investor interest in gold continued to pick up this week,
reflected in inflows of metal into exchange-traded funds.
    Holdings of gold in the major exchange-traded funds (ETF)
tracked by Reuters have risen by over 800,000 ounces this
month, marking their first monthly increase since July.
    Gold, of late, has moved in tighter lock-step with
industrial commodities such as copper, or riskier assets such
as equities, in the last month and has thus been more prone to
falling in times of heightened uncertainty, rather than
adopting its traditional safe-haven role and benefiting from
such turmoil.
    Silver was lower at $33.15 an ounce from $34.23
previously. Platinum cut its declines to $1,584.25 an
ounce from Monday's closing bid at $1,593.15. And, palladium was quoted at $632.45, off $641.08 previously.
    For platinum group metals, Tuesday's data on U.S. car sales
was expected to be supportive with incomplete results showing
robust, though mixed, October sales. A Reuters poll forecast
annualized sales of 13.20 million vehicles sold in October. 
Prices at 2:10 p.m. EDT (1809 GMT)    
                             LAST/      NET    PCT     YTD
                             CLOSE      CHG    CHG     CHG
US gold 1711.80   -13.40  -0.8%   20.4%
US silver 32.731   -1.623   0.0%    5.8%
US platinum 1582.00   -25.60  -1.6%  -11.0%
US palladium 635.00   -16.15  -2.5%  -21.0%
Gold 1717.40     4.24   0.2%   21.0%
Silver 33.34    -0.88  -2.6%    8.1%
Platinum 1586.50    -9.10  -0.6%  -10.4%
Palladium 634.88    -6.20  -1.0%  -20.6%
Gold Fix 1699.00    -3.00  -0.2%   20.5%
Silver Fix 32.97  -127.00  -3.7%    7.6%
Platinum Fix 1572.00     9.00   0.6%   -9.2%
Palladium Fix 631.00     4.00   0.6%  -20.2%