PRECIOUS-Gold posts biggest quarterly gain in over two years

Fri Sep 28, 2012 3:07pm EDT

* Gold eases for day, but extends monthly rise to four
    * US gold open interest hit one-year high on fund
positioning
    * U.S. gold coin buying rebounds but set for weak September
    * Coming up: Markit Manufacturing PMI due Monday

 (Adds details and graphic link, updates market activity)
    By Frank Tang
    NEW YORK, Sept 28 (Reuters) - Gold eased on Friday, but the
metal posted its biggest quarterly gain in more than two years
as market stimulus and easy monetary policies by central banks
around the world boosted bullion's inflation-hedge appeal.
    The metal is within reach of its 2012 high, while open
interest for U.S. gold futures surged to a one-year high on
heavy buying related to fund positioning before the quarter end.
(OI hits 1-year high: r.reuters.com/cud92t)
    Gold priced in euro terms hit a record for a
second straight day, highlighting the currency's weakness and
bullion's safe-haven status among Europeans in times of economic
uncertainty.
    Bullion found support after an audit of Spain's major banks
showed they would need extra capital to ride out an economic
downturn, and France's Socialist President Francois Hollande
unveiled higher levies on business and a 75-percent tax for the
super-rich in a 2013 budget.  
    "Gold is being utilized as a protest by investors against
governments which are failing miserably to solve their deficit
and debt problems," said Jeffrey Sica, chief investment officer
of SICA Wealth Management, which has over $1 billion in assets.
    Sica said that gold should rise to a record $2,000 an ounce
in the fourth quarter as investors piled into the safe-haven
metal while other assets such as equities and bonds fell out of
favor.
    Spot gold was down 0.4 percent at $1,770 an ounce by
2:33 p.m. EDT (1833 GMT), sharply off an earlier high of
$1,783.10.
    Gold still climbed around 11 percent this quarter, its best
quarterly gain since the second quarter of 2010. September's
gain of almost 5 percent also extended its monthly rise to a
four consecutive month.
    U.S. COMEX gold futures for December delivery settled
down $6.60 an ounce at $1,773.90, with trading volume about 20
percent below its 250-day average, preliminary Reuters data
showed.
    COMEX futures' open interest surged 11,579 lots or 2 percent
to a one-year high of 492,149 lots as of Thursday. The gauge
which measures outstanding long and short gold futures contracts
has rallied more than 25 percent in the past 30 days.
    Some funds had added gold to "dress up" their third-quarter
performance before the quarter ended, said George Gero, vice
president of RBC Capital Market. 
    Bullion prices took off after the U.S. Federal Reserve said
earlier this month it would pump $40 billion into the economy
each month until it saw a sustained upturn in the weak jobs
market. Gold investors also took heart on signs the European
Central Bank and the People's Bank of China will ease their
monetary policies to stimulate growth.
    
    COIN, ETF SALES UP IN Q3
    The precious metal has posted a positive quarter in terms of
investment in gold exchange-traded funds. ETFs tracked by
Reuters are on track for their biggest quarterly inflows in well
over a year at around 3.3 million ounces. 
    Coin dealers said sales of U.S. American Eagle gold coins
rebounded as bullion prices rallied, and they are optimistic
about sales in the fourth quarter. 
    September sales of American Eagles, however, are set to be
the lowest since 2007.
    Other precious metals also recorded a positive quarter, with
silver the star performer, rising about 25 percent. On Friday,
spot silver was down 0.8 percent at $34.37 an ounce.
    Spot platinum climbed 1 percent to $1,659.24 an ounce
for a 15 percent quarterly rise, while spot palladium was
up 0.7 percent at $634.40 an ounce, up over 9 percent this
quarter.
    
 2:33 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold DEC   1773.90  -6.60  -0.4  1769.50 1785.90  134,714
 US Silver DEC  34.577 -0.089  -0.3   34.395  34.925   41,358
 US Plat OCT   1665.30  19.40   1.2  1650.60 1673.20      688
 US Pall DEC    640.80   5.40   0.8   636.00  644.10    3,309
                                                               
 Gold          1770.00  -7.29  -0.4  1767.85 1783.10         
 Silver         34.370 -0.260  -0.8   34.380  34.850
 Platinum      1659.24  16.04   1.0  1653.25 1672.49
 Palladium      634.40   4.10   0.7   636.00  641.50
                                                               
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        144,051   159,398   173,576     16.71   -0.06
 US Silver       43,360    60,350    57,792        35    7.00
 US Platinum      9,022    16,358     9,634     22.69   -0.07
 US Palladium     3,312     7,532     4,828                  
                                                               
 
 (Additional reporting by Jan Harvey in London; editing by Jim
Marshall and Gunna Dickson)
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