PRECIOUS-Gold higher as US consumer prices rise, dollar drops

Tue Oct 16, 2012 2:31pm EDT

Related Topics

* Gains in US equities lift gold after CPI data
    * Technical support underpins as bullion held above 50 DMA
    * Largest gold, silver ETFs report outflows
    * Coming up: U.S. housing starts Wednesday

 (Updates prices, adds trader caution ahead of debate)
    By Frank Tang
    NEW YORK, Oct 16 (Reuters) - Gold rose on Tuesday to snap
two days of hefty losses lifted by a broad dollar drop and by
data showing U.S. consumer prices climbed but not enough to
derail the Federal Reserve's ultra-easy monetary policy.
    The metal rebounded from Monday's one-month low, after U.S.
Labor Department said U.S. Consumer Price Index climbed 0.6
percent in September, matching analysts' expectations and
August's reading. Solid gains in U.S. equities also
underpinned bullion.  
    Gold has rallied $200 an ounce in the last two months due to
hopes that the Fed's monetary stimulus might trigger inflation.
The U.S. central bank said in September it would keep buying
mortgage-backed securities until the job market improves
dramatically.
    "From an inflation standpoint, the fact that the CPI is in
line gives the Fed more room to continue easing," said Adam
Sarhan, CEO of Sarhan Capital.  
    Technical buying also boosted gold as it held well above key
support of its 50-day moving average (DMA) despite Monday's
pullback. Late last month, the metal formed a bullish "golden
cross," in which its 50 DMA traded above its 200 DMA. 
    As long as gold held above its 50 DMA, it stood ready to
challenge its next major resistance at $1,800 an ounce, Sarhan
said.
    Spot gold was up 0.5 percent at $1,744.60 an ounce by
2:05 PM EDT (1805 GMT), well above the previous day's one-month
low at $1,728.75. The metal had dropped almost 2 percent in the
last two sessions.
    U.S. COMEX gold futures for December delivery settled
up $8.70 an ounce at $1,746.30, with trading volume at about 45
percent below its 30-day average, preliminary Reuters data
showed.
    Some analysts said some gold investors stayed on the
sidelines due to political uncertainty ahead of a second U.S.
presidential debate. 
    A U.S. "fiscal cliff" of automatic spending cuts and tax
increases scheduled for January also triggered some safe-haven
bids, traders said. That scenario could shock the economy and
lead to more money printing from the Fed.

    ETF HOLDINGS EASE
    Investors appeared to lessen their bullish bets on gold
after Monday's decline. Holdings of bullion exchange-traded
funds tracked by Reuters fell on Monday, due to
an outflow from the largest gold ETF the SPDR Gold Trust.
    The largest silver ETF, the iShares Silver Trust also
recorded an outflow of about 0.3 million ounces on Monday. 
    Other precious metals also rebounded after Monday's sharp
pullback. Silver was up 0.6 percent at $32.87 an ounce.
On Monday it hit a one-month low at $32.53 an ounce.
    Platinum group metals climbed, even though analysts said
sentiment remained cautious after Chinese-owned car maker Volvo
said it would halt production for a week this month due to
continued low demand, especially in Europe. 
    Spot platinum edged up 0.1 percent at $1,636.74 an
ounce, while spot palladium was up 0.9 percent at $635.47
an ounce.
    
 2:05 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold DEC   1746.30   8.70   0.5  1736.10 1748.90   91,883
 US Silver DEC  32.959  0.216   0.7   32.655  33.080   25,677
 US Plat JAN   1645.20  12.90   0.8  1635.00 1652.70    5,140
 US Pall DEC    638.95   6.35   1.0   631.50  642.40    1,683
                                                              
 Gold          1744.60   9.11   0.5  1735.40 1747.20         
 Silver         32.870  0.180   0.6   32.650  33.020
 Platinum      1636.74   1.48   0.1  1635.75 1645.24
 Palladium      635.47   5.87   0.9   634.27  640.00
                                                              
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold         95,535   170,257   174,265        16    0.07
 US Silver       26,901    51,596    56,765        35    7.00
 US Platinum      5,250    15,849     9,750     21.23    0.64
 US Palladium     1,793     4,264     4,816                  
                                                              
 
 (Additional reporting by Jan Harvey in London; Editing by
Marguerita Choy and Bob Burgdorfer)
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