PRECIOUS-Palladium hits 16-month high on economic recovery hope

Fri Jan 18, 2013 3:21am EST

* Asia's physical gold buying slows down as prices rise
    * Spot palladium hits $729.72/oz
    * Spot gold may rise to $1,706/oz -technicals
    * Coming Up: U.S. TR/UMich consumer sentiment; 1455 GMT

 (Adds details, comments; writes through; updates prices)
    By Rujun Shen
    SINGAPORE, Jan 18 (Reuters) - Palladium rose to a 16-month
high on Friday and platinum hovered near a three-month high hit
in the previous session, buoyed by upbeat data from the world's
top two economies, as gold traded slightly higher to near a
one-month high.
    China snapped seven quarters of slowing expansion, official
data showed, while U.S. labour and housing market numbers on
Thursday were also robust.  
    The quickening pace of growth in the world's No.2 economy is
likely to underpin sentiment towards platinum group metals,
which have rallied strongly in the past week or so on optimism
over the global outlook.
    "They are clearly in a sweet spot," said Dominic Schnider,
an analyst at UBS Wealth Management in Singapore.
    "Gold will still be supported, but the gains will be modest,
while the industry-inclined precious metals will really benefit
from the improved industrial demand as well as financial
demand."
    Expectations that the U.S. Federal Reserve would continue
its monetary stimulus, as well as concerns about U.S. fiscal
conditions will keep gold attractive as a hedge against
inflation and political turmoil.
    Spot palladium led the gains in the complex with a
1-percent gain, to $730.22 an ounce by 0753 GMT. It hit a
16-month high of $730.47 earlier. 
    The metal, mainly used to produce catalyst converters for
gasoline-powered vehicles that dominate U.S. and Chinese
markets, was on course for a ninth straight session of gains,
its longest since September.
    Spot platinum inched up 0.3 percent to $1,694.50, on
course for a weekly gain of more than 3 percent in its third
straight week of rises. It hit a three-month high of $1,701.50
in the previous session.
    
    GOLD PHYSICAL BUYING SLOWS
    Strong physical buying interest from the start of the year
eased as prices rebounded towards a key resistance at $1,700,
dealers said.
    "Demand has been slowing down a fair bit," said a
Singapore-based dealer, "China is very quiet and India demand
has slowed, compared to the beginning of the year."
    Spot gold edged up 0.3 percent to $1,692.14 an ounce,
heading for a weekly rise of 1.8 percent, its biggest such climb
in nearly two months. It hit a one-month high of $1,695.56 on
Thursday.
    U.S. gold was little changed at $1,694.50.
    Spot gold is expected to rise to $1,706 an ounce in the day,
as it is riding on a wave c, said Reuters market analyst Wang
Tao. 
    Benchmark gold on the Tokyo Commodity Exchange hit a
record high of 4,911 yen a gram as yen dropped to a 2-1/2-year
low against the dollar. 
    
    
    
    Spot silver rose to a one-month high of $31.91, on
course for a 4.7-percent weekly gain.
    The U.S. Mint has sold out its 2013 American Eagle silver
bullion coins due to soaring demand in the first two weeks of
the year. 
    
   Precious metals prices 0753 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1692.14    4.88   +0.29      1.05
  Spot Silver        31.89    0.17   +0.54      5.32
  Spot Platinum    1694.50    5.51   +0.33     10.39
  Spot Palladium    730.22    7.50   +1.04      5.52
  COMEX GOLD FEB3  1692.40    1.60   +0.09      0.99        18538
  COMEX SILVER MAR3  31.91    0.10   +0.31      5.56         4968
  Euro/Dollar       1.3396
  Dollar/Yen         90.05
  COMEX gold and silver contracts show the most active months
   

 (Editing by Clarence Fernandez)