PRECIOUS-Gold drops for third day on worries of global slowdown

Tue Oct 9, 2012 3:02pm EDT

Related Topics

* IMF warning on global growth, China slowdown fear weigh
    * Investment demand intact as ETPs set another record high
    * Coming up: U.S. wholesale inventory, Fed's Beige Book Weds

 (Adds details, updates market activity)
    By Frank Tang
    NEW YORK, Oct 9 (Reuters) - Gold fell for a third
consecutive session on Tuesday as a stern warning by the
International Monetary Fund on global growth and worries about a
slowing Chinese economy lessened bullion's appeal as an
inflation hedge.
    The metal came under pressure as televised scenes of angry
Greek protesters filled the streets of Athens to greet German
Chancellor Angela Merkel, who offered no promise of further aid,
dampened buying sentiment. 
    Also weighing on gold were remarks by China's central bank
governor that China will keep monetary policy flexible and
pre-emptive to support an economy still facing relatively big
downward pressure. 
    A third straight day of decline sent gold well below an
overbought level, and some analysts said the metal is due for a
rebound because of money printing by central banks. The relative
strength index (RSI) fell below 60, under the 70 mark at which a
market is generally considered overextended.
    On Tuesday, traders said China's central bank would flood
money markets through reverse bond repurchase agreements for a
second straight trading week. 
    "I do believe the slowdown in China will be much more severe
than people anticipate and there is nothing the central bank can
do to change it," said Jeffrey Sica, chief investment officer at
SICA Wealth which manages over $1 billion in assets.
    Spot gold was down 0.5 percent at $1,764.84 an ounce
by 2:39 p.m. (1839 GMT), even though the price was still within
reach of its 11-month high at $1,795.69.
    U.S. COMEX gold futures for December delivery settled
down $10.70 at $1,765 an ounce, with trading volume about 30
percent below its 30-day average, preliminary Reuters data
showed.
    Gold, a traditional inflation hedge, tends to weaken on
signs of slowdown in China, the world's second-largest economy
and often considered one of the top drivers of global growth.
    The IMF said the global economic slowdown is worsening as it
cut its growth forecasts for the second time since April and
warned U.S. and European policymakers that failure to fix their
economic ills would prolong the slump.    
    
    OIL RALLY, GEOPOLITICAL TENSIONS
    Gold's drop was limited by a sharp rally in crude oil prices
due to supply worries driven by heightened geopolitical tensions
in the Middle East. 
    Reflecting continued investor demand for gold against a
worsening economic backdrop was another inflow of metal into
exchange-traded products (ETPs), which brought global holdings
to a fresh record by Monday's close. 
    Among other precious metals, silver eased 0.1 percent
at $33.91 an ounce.
    Platinum inched down 0.1 percent on the day to
$1,685.10 an ounce.
    The price of platinum has been underpinned by unrest that
has swept through South Africa's platinum belt. Nearly 100,000
workers are on strike in the country and 75,000 of those work in
the mining industry.
    Several operations belonging to world number one producer
Anglo American Platinum remain shuttered, along with
facilities belonging to other smaller miners. 
    Palladium eased 20 cents at $653.90 per ounce.
    
 2:39 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold DEC   1765.00 -10.70  -0.6  1762.00 1781.60  127,849
 US Silver DEC  33.985 -0.032  -0.1   33.570  34.260   34,678
 US Plat OCT   1691.60  -3.30  -0.2  1690.00 1708.70        6
 US Pall DEC    658.20   1.25   0.2   654.10  666.35    2,043
                                                               
 Gold          1764.84  -9.45  -0.5  1761.05 1779.35         
 Silver         33.910 -0.050  -0.1   33.580  34.210
 Platinum      1685.10  -1.70  -0.1  1687.50 1705.50
 Palladium      653.90  -0.20   0.0   656.77  663.50
                                                               
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        130,674   170,158   174,029     16.05   -0.12
 US Silver       35,960    58,328    57,070        35    7.00
 US Platinum      9,185    15,773     9,702     20.38    0.87
 US Palladium     2,070     5,154     4,864                  
                                                               
 
 (Additional reporting by Clare Hutchison, Veronica Brown in
London and Rujun Shen in Singapore; editing by Andrew Hay and
Bob Burgdorfer)
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