PRECIOUS-Gold set for 1 pct weekly drop; options, Fed eyed

Fri Apr 20, 2012 12:33pm EDT

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* Gold on track for 1 pct fall, physical demand weak
    * Investors on sidelines, eying option expiry, Fed
    * Indian purchases disappoint ahead of gold-buying festival

 (Rewrites, updates comment, market activity; adds NEW YORK
dateline, byline)	
    By Frank Tang and Jan Harvey	
    NEW YORK/LONDON, April 20 (Reuters) - Gold stayed nearly
flat in thin trade o n Friday, on track to log declines for two
of the past three weeks as investors took to the sidelines ahead
of a key U.S. option expiration and a Federal Reserve policy
meeting next week.	
    The metal inched down despite usually bullish factors
including a weaker dollar, an oil rally and gains in U.S.
equities on better-than-expected results from General Electric
 and Microsoft.	
    Option traders said gold prices could gravitate toward the
$1,650 call strike ahead of next week's expiry of COMEX May
options. Open interest for the popular strike has nearly doubled
over the last 30 days despite dwindling volume in futures,
dealers said.	
    "There are over 12,000 lots (1.2 million ounces) of open
interest on the COMEX expiry next Wednesday for the $1,650
strike," TD Securities precious metals analysts said in a note.	
    "This is clearly starting to draw market interest and will
likely mean the price does not deviate significantly away until
expiry," the note said.     	
    Spot gold edged down 0.1 percent to $1,641.39 an
ounce by 11:42 a.m. EDT (1542 GMT). 	
    This week, bullion has held within its narrowest weekly
range in more than a year. It is on track for a 1 percent weekly
decline following a four-day drop earlier in the week. 	
    U.S. gold futures for June delivery were up $1.30 at
$1,642.70 in extremely low trading volume.	
    Gold is struggling for direction as buyers await the outcome
of International Monetary Fund and World Bank meetings this
weekend, at which plans to tackle the euro zone debt crisis will
be discussed, and the Federal Reserve's meeting on U.S. monetary
policy next week.	
    Gold has lost around $150 an ounce since late February after
a strong run of U.S. economic data dashed hopes of further
monetary easing by the Fed.	
          	
    PHYSICAL BUYING WEAK	
    Appetite for physical gold in India, historically the
world's top bullion consumer, has been lackluster ahead of the
gold-buying festival of Akshaya Tritiya on Tuesday next week, as
high prices and rupee weakness curbed interest in the metal.	
    UBS said in a note that current physical demand has been
underwhelming, and that offered little assurance that gold can
easily find support on any further price drops.	
     	
    Silver was down 0.2 percent at $31.66 an ounce, while
spot platinum edged up 0.2 percent at $1,577.74 an ounce
and palladium rose 1.9 percent to $671.97 an ounce.	
	
 Prices at 11:42 a.m. EST (1542 GMT)                          
 
                               LAST      NET    PCT     YTD
                                         CHG    CHG     CHG
 US gold                    1642.70     1.30   0.1%    4.8%
 US silver                   31.645   -0.134  -0.4%   13.4%
 US platinum                1583.20     5.20   0.3%   13.1%
 US palladium                674.35    11.65   1.8%    2.9%
 
 Gold                       1641.39    -1.09  -0.1%    5.0%
 Silver                       31.66    -0.06  -0.2%   14.3%
 Platinum                   1577.74     3.14   0.2%   13.3%
 Palladium                   671.97    12.22   1.9%    3.0%
 
 Gold Fix                   1641.50     1.50   0.1%    4.3%
 Silver Fix                   31.79    32.00   1.0%   12.8%
 Platinum Fix               1579.00     2.00   0.1%   14.3%
 Palladium Fix               666.00     6.00   0.9%    4.7%
 	
 (Editing by Dale Hudson)
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