Gold rises in thin trade but set for weekly loss

NEW YORK/LONDON Thu Apr 5, 2012 3:17pm EDT

Gold Bullion from the American Precious Metals Exchange (APMEX) is seen in New York, September 15, 2011. REUTERS/Mike Segar

Gold Bullion from the American Precious Metals Exchange (APMEX) is seen in New York, September 15, 2011.

Credit: Reuters/Mike Segar

NEW YORK/LONDON (Reuters) - Gold rose on Thursday, as investors covered short positions after a sharp two-day pullback, and a crude oil rally also buoyed the precious metal that sank early this week on disappointment about further U.S. monetary easing.

Bullion rebounded from its biggest two-day drop in a month after it steadied above psychological resistance at $1,600 an ounce, where investors had placed heavy put options to protect against further losses.

Trading volume was thin ahead of Friday's key U.S. nonfarm payrolls report and the Good Friday holiday in most Western markets. Gold remained on track for a weekly decline exceeding 2 percent after minutes of the latest Federal Reserve policy meeting doused hopes for further U.S. monetary stimulus.

Market watchers said some hedge funds might have reduced gold holdings due to stronger U.S. economic data and easing of fears about European debt.

"A lot of the gold trade by hedge funds was specifically tied to a new round of Fed stimulus," said Jeffrey Sica, chief investment officer of SICA Wealth Management with more than $1 billion in assets.

"If there is any perception that momentum in gold will taper, hedge funds will take the opportunity to sell. Gold is always vulnerable because of how well it has done," he said.

Spot gold was up 0.6 percent at $1,628.31 an ounce by 2:36 p.m. EDT (1836 GMT).

Gold briefly broke back above $1,630 an ounce as a drop in U.S. weekly initial jobless claims pulled the dollar from its highs and stocks from their lows, but was unable to sustain the move.

U.S. gold futures for June delivery settled up $16 percent at $1,630.10 an ounce, with trading volume about halved of its 30-day average, preliminary Reuters data showed.

Gold has fallen 2.3 percent so far this week, the third-worst weekly drop of the year, retreating further from the March high above $1,790 an ounce on hopes of more Fed stimulus.

Dennis Gartman, a veteran trader, said that gold on weekly charts suggested the metal has been in a bearish trend since the first quarter of 2011 as each new interim low has been lower than the previous one.

Gartman added that gold's uptrend on weekly charts has been clearly broken.

QE HOPES DASHED?

Analysts said that gold's record high at above $1,900 an ounce in September 2011 reflected the premium of a third round of Fed asset buying known as quantitative easing (QE).

The metal had dropped 3.5 percent in the previous two sessions as the market had largely factored in QE3 after the U.S. central bank in January said it would keep rates near zero until 2014.

However, INTL FCStone metals analyst Edward Meir said he cannot rule out the possibility of U.S. economic recovery "topping out", which could boost precious metals as the Fed brings the easing option back onto the table.

Among other precious metals, spot silver was up 1.1 at $31.67 an ounce, spot platinum edged up 0.2 percent at $1,595.19 an ounce, and spot palladium gained 2.1 percent at $642.70 an ounce. 2:36 PM EDT LAST/ NET PCT LOW HIGH CURRENT

SETTLE CHNG CHNG VOL US Gold JUN 1630.10 16.00 1.0 1620.70 1634.80 106,328 US Silver MAY 31.73 0.686 2.2 31.175 31.810 36,600 US Plat JUL 1607.60 9.00 0.6 1590.20 1611.20 7,211 US Pall JUN 644.80 12.05 1.9 629.90 646.00 3,098

Gold 1628.31 9.06 0.6 1620.63 1633.06 Silver 31.670 0.350 1.1 31.240 31.800 Platinum 1595.19 2.64 0.2 1590.00 1604.99 Palladium 642.70 13.25 2.1 631.75 643.25

TOTAL MARKET VOLUME 30-D ATM VOLATILITY

CURRENT 30D AVG 250D AVG CURRENT CHG US Gold 117,606 202,949 196,995 18.72 -0.46 US Silver 44,288 62,099 60,020 31.42 3.56 US Platinum 7,298 10,929 8,408 19 0.00 US Palladium 3,105 4,904 4,678

(Editing by David Gregorio and Sofina Mirza-Reid)

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Comments (1)
tutus1980 wrote:
Gold is set to rise to unbelievable heights. Gold is the best hedge against natural disasters, inflation or war. China’s latest March figures saw their inflation rising unexpectedly which drives up the price of gold. India is now buying Iranian oil in GOLD. This they are doing to circumvent the US ban on trading with Iran. India depends heavily on Iran for oil and using gold is a way out. According to the World Gold Council, India & China are currently huge buyers of gold. They are the fastest growing economies. The wealthier they get, the more gold they will buy. In 2011, gold sales to China shot up 20% on the previous year to 769.8 tonnes. The data suggests China’s new rich are turning to gold to protect their wealth as the government seeks to tame the country’s giddy property prices. India remained the world’s biggest market for gold last year purchasing 933.4 tonnes of gold. And that is just two nations. I am not talking of other fast growing Asian countries. The US has an almost $16 trillion debt which is now over 100% of GDP and rising fast at the staggering rate of about $125-$130 billion per month or about $4.33 billion per day. Shocking again but true.

Apr 11, 2012 3:12am EDT  --  Report as abuse
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