PRECIOUS-Gold edges up, trade thin as market watches central banks

Wed Aug 8, 2012 3:36pm EDT

* Doubts on central bank action keep trading light
    * Bank of England says no urgent need to ease money
    * Gold demand in India soft ahead of festival season
    * Coming up: U.S. jobless claims, wholesale data Thursday

 (New throughout, updates prices, market activity; adds graphic
link)
    By Frank Tang
    NEW YORK, Aug 8 (Reuters) - Gold inched up on Wednesday, but
remained in a tight range as trading was quiet again due to
investor uncertainty about whether central banks would act to
stimulate frail economies.
    Comments from Bank of England Governor Mervyn King saying
there was no urgent need to print more money disappointed
bullion investors hoping for stimulus actions from central
banks. 
    Traders said the gold market was still wondering whether the
U.S Federal Reserve and the European Central Bank will use
monetary stimulus, which could encourage gold buying, or refrain
from further action, which  will probably spur selling. 
    Volume in U.S. gold futures was weak for a third consecutive
day. Nearly flat performance in U.S. equities and crude oil
failed to inspire a further rally in the metal. 
    "There appears to be little investor enthusiasm to push gold
prices in any clear direction. A dearth of important economic
releases this week and thin summer turnover may leave gold
trading in a near-term no-man's land," said James Steel, HSBC's
chief commodity analyst.
    Spot gold inched up 0.1 percent at $1,612.35 an ounce
by 2:28 p.m. EDT (1828 GMT), recovering from losses earlier in
the session.
    U.S. gold futures for December delivery settled up
$3.20 an ounce at $1,616, with volume at around 40 percent below
its 30-day average, preliminary Reuters showed.
    Volume and volatility should stay low until the end of the
month when a central bankers' meeting will be held at Jackson
Hole, Wyoming, where Fed Chairman Ben Bernanke might drop a hint
about possible easing, TD Bank strategists said in a note.
    Implied volatility for at-the-money gold call options
hovered at 14, near a one-year low. Traders said, however, the
metal looked set for a rebound rally, with volatility set to
climb back to the normal level at around 20.
    
     
 
    
    WEAK INDIAN DEMAND, MONSOON IN FOCUS
    Physical buying in gold, however, remained disappointing.
    Gold demand in major consumer India was soft at the start of
the festival season, with rural buyers on the sidelines, holding
on to cash at a time when deficient monsoon rains threaten to
dent incomes. 
    The rural population accounts for 60 percent of the gold
demand from India, where a weak rupee has already hit gold
buying, keeping local prices high. A hike in import taxes aimed
at cutting the trade deficit has also crimped gold buying.
    In China, vying with India as the world's top gold buyer,
the trading volume on the popular gold spot deferred contract on
the Shanghai Gold Exchange was down nearly 30
percent from July's average daily volume.
    Among other precious metals, silver was down 0.1
percent at $28.03 an ounce, while of the platinum group metals,
platinum edged up 0.1 percent at $1,403.75 an ounce and
palladium gained 0.5 percent to $582.70 an ounce. 
 2:28 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold DEC   1616.00   3.20   0.2  1605.90 1619.50   89,772
 US Silver SEP  28.075 -0.011   0.0   27.660  28.210   36,302
 US Plat OCT   1410.20  -0.20   0.0  1399.00 1411.40    4,302
 US Pall SEP    586.50  -1.70  -0.3   581.50  587.95    2,207
                                                              
 Gold          1612.35   1.67   0.1  1603.98 1616.40         
 Silver         28.030 -0.040  -0.1   27.730  28.250
 Platinum      1403.75   1.15   0.1  1401.00 1406.50
 Palladium      582.70   3.00   0.5   584.50  587.50
                                                              
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold         97,049   167,910   190,651     17.36   -0.03
 US Silver       50,562    45,218    57,012     24.72   -0.68
 US Platinum      4,447     8,537     8,978        23    0.00
 US Palladium     3,087     2,926     4,342                  
                                                              
 
 (Additional reporting by Jan Harvey in London; Editing by Bob
Burgdorfer and David Gregorio)
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