PRECIOUS-Gold rises on hope for US easing, hedge fund bullish

Wed Aug 15, 2012 3:56pm EDT

* Muted US consumer inflation, poor manufacturing data help
    * Currency movements drive gold as summer volume weak
    * Paulson raised gold stake in Q2, seen as confidence boost
    * Coming up: U.S. housing starts, jobless claims Thursday

 (Adds details, graphic link)
    By Frank Tang
    NEW YORK, Aug 15 (Reuters) - Gold rebounded on Wednesday
from two straight losing sessions, as muted U.S. consumer
inflation raised hopes for monetary stimulus and a prominent
hedge fund manager's increased appetite for bullion brightened
market sentiment.
    Long-time gold bull John Paulson raised his stake in the No.
1 gold exchange-traded fund, SPDR Gold Trust, in the
second quarter, a sign that the well-known money manager favors
the metal as a long-term currency and inflation hedge.
    Market hopes for gold-boosting monetary easing increased
after data showed U.S. consumer prices stayed flat in July. In
addition, a gauge of manufacturing in New York state contracted
this month. 
    Gold has failed to break out of a range between $1,525 and
$1,680 an ounce in the past four months as disappointment over a
lack of more aggressive stimulus by the U.S. Federal Reserve and
other central banks dampened buying. Lackluster global economic
indicators, however, put a floor under the metal.
    "We are stuck in a range and the investors have been very
cautious on both ends of the $1,600 pivot point. Still, the
market could react in a moment's notice because the volume is
that thin," said Anthony Neglia, president of Tower Trading and
a COMEX gold options floor trader in New York.
    Spot gold rose 0.4 percent to $1,604.35 an ounce by
3:38 p.m. EDT (1938 GMT).
    U.S. COMEX December futures settled up $4.20 at
$1,606.60 an ounce. Trading volume was below 100,000 lots at
around 3:40 p.m., some 40 percent below its 30-day average,
preliminary Reuters data showed.
    On the options front, gold's 30-day implied volatility
hovered near a one-year low of 14. Still, some investors
continued to use bullish option strategies such as deep
out-of-the-money calls with strike prices between $1,900 and
$2,000 to catch the metal's upside, COMEX floor traders said.
       
    PAULSON UPS GOLD STAKE
    Paulson's SPDR Gold Trust stake-raising marked his first
increase since the first quarter of 2009, a U.S. regulatory
filing showed late on Tuesday. The move boosted confidence that
bullion prices have more room to rise this year despite a
lackluster performance in the first half. 
    (Fund ownership changes: link.reuters.com/vet99s)
    "The fact that ... one guy who made the most money in his
gold fund is increasing his holding, you have to feel confident
about that if you are a gold bull," said Mihir Dange, COMEX gold
options floor trader for Arbitrage LLC.
    Billionaire financier George Soros more than doubled his
shares in the ETF, while Eton Park Capital's Eric Mindich had
dissolved his stake by the end of the second quarter.
 
    Among other precious metals, spot platinum inched up
$1.39 to $1,391.99 an ounce, while spot palladium gained
0.1 percent to $573.41 an ounce. Silver rose 0.4 percent
to $27.85 an ounce.

 3:38 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold DEC   1606.60   4.20   0.3  1592.10 1608.80   90,159
 US Silver SEP  27.812  0.049   0.2   27.430  27.960   28,668
 US Plat OCT   1396.20  -2.90  -0.2  1391.10 1406.40    5,985
 US Pall SEP    578.05  -0.35  -0.1   573.00  581.00    3,143
                                                              
 Gold          1604.35   6.31   0.4  1590.58 1605.90         
 Silver         27.850  0.100   0.4   27.520  28.000
 Platinum      1391.99   1.39   0.1  1396.50 1403.00
 Palladium      573.41   0.41   0.1   576.50  580.00
                                                              
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold         95,690   161,236   187,667     17.01   -0.10
 US Silver       38,039    39,793    56,643     23.09   -0.54
 US Platinum      6,203     6,852     8,963        23    0.00
 US Palladium     4,612     2,699     4,352                  
                                                              
 

 (Additional reporting by Jan Harvey in London; Editing by Dale
Hudson and Marguerita Choy)
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