PRECIOUS-Gold ends flat as open interest hits 1-year high

Thu Sep 20, 2012 4:37pm EDT

* Investors take breather after recent strong rally
    * US COMEX futures open interest highest in one year
    * Bullish "golden cross" on charts signals better momentum

 (New details throughout, changes byline, dateline previously
LONDON)
    By Frank Tang
    NEW YORK, Sept 20 (Reuters) - Gold ended nearly flat on
Thursday as the market paused after its recent sharp rally,
while a key technical-chart formation suggests momentum is
turning increasing bullish.
    Even though the metal's price was little changed for a
second consecutive day, open interest in U.S. gold futures rose
to a one-year high, a sign that volatility could spike after an
option expiration next week.
    On Thursday, the metal traded in a relatively narrow $20
range, largely tracking a flat U.S. equities market. Bullion
investors held their bets after the metal's strong gains that
followed new monetary stimulus by central banks around the
world.
    Spot gold was down 0.1 percent at $1,767.90 an ounce
by 3:58 p.m. EDT (1958 GMT).
    U.S. COMEX gold futures for December delivery settled
down $1.50 an ounce at $1,770.20, with trading volume in line
with its 30-day average, preliminary Reuters data showed.
    COMEX futures' open interest, which measures the total
outstanding long and short contracts, rose to a one-year high at
481,999 lots as of Wednesday. 
    "This could lead to greater volatility at the end of next
week after (COMEX) option expiration as there are now many new
longs at high prices anxiously watching signs from other
markets," said George Gero, vice president of RBC Capital
Markets.
    Open interest of U.S. gold futures has gained about 25
percent in the past 30 days.
    Gold has gained nearly $200, or 10 percent, in the past four
weeks. A new round of bond buying by the U.S. Federal Reserve
last week and loose monetary policies from other major central
banks have rekindled the metal's appeal as a traditional
inflation hedge.
    
    TECHNICAL OUTLOOK BRIGHT
    A "golden cross" formed on spot gold's price chart gives
bullion investors another reason to increase their bullish bets.
    On Thursday, gold's 50-day moving average (DMA) traded above
its 200 DMA, which marked a golden cross in technical analysis,
indicating bullion's intermediate and longer-term momentum is
getting increasingly bullish.
(Golden cross graphic: r.reuters.com/tas72t)
    "Given shorter-term moving averages have all turned higher
in recent weeks and the bullish price action recently, this
golden cross today is an additional indicator of strength in an
already strong market," said Adam Sarhan, chief executive of
Sarhan Capital.
    Among other precious metals, silver edged up 0.1
percent at $34.60 an ounce, while spot palladium was down
0.9 percent at $660.47 an ounce.
    Spot platinum fell 0.6 percent to $1,622.49 an ounce.
The metal has fallen by more than 5 percent this week, on track
for its biggest weekly drop since December, as strike action at
No. 3 platinum miner Lonmin's Marikana mine in South
Africa wound down. 
 3:58 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold DEC   1770.20  -1.50  -0.1  1757.70 1774.90  135,193
 US Silver DEC  34.682  0.094   0.3   34.120  34.800   45,491
 US Plat OCT   1623.90 -16.50  -1.0  1596.00 1641.80   17,054
 US Pall DEC    661.10 -11.95  -1.8   657.00  672.75    4,936
                                                               
 Gold          1767.90  -1.29  -0.1  1756.70 1771.89         
 Silver         34.600  0.030   0.1   34.120  34.740
 Platinum      1622.49 -10.01  -0.6  1599.75 1637.00
 Palladium      660.47  -6.33  -0.9   659.50  669.00
                                                               
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        144,471   143,482   183,540     17.31   -0.25
 US Silver       47,734    57,795    53,682     30.69   -0.36
 US Platinum     22,912    18,134     9,341     23.46   -0.97
 US Palladium     5,197     8,301     4,657                  
                                                               
 
 (Additional reporting by Jan Harvey and Amanda Cooper in
London; Editing by Bob Burgdorfer)
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