PRECIOUS-Gold down as Cyprus fears ease, notches weekly gain

Fri Mar 22, 2013 3:46pm EDT

* Greek bank deal with Cyprus eases market jitters, Wall St
up
    * Spot gold faces technical resistance at $1,620/oz
    * Investors monitor development of Cyprus, EU ahead of
weekend
    * Coming up: U.S. Chicago Fed index, Dallas Fed
manufacturing Mon.

 (Adds market details, updates prices)
    By Frank Tang
    NEW YORK, March 22 (Reuters) - Gold fell on Friday as
investors took profits a day after the precious metal hit a
one-month high, and safe-haven buying dried up as a deal between
Greece and Cyprus eased fears of an escalating euro zone debt
crisis.
    For the week, bullion gained 1 percent, its biggest weekly
gain in 2 months, with investors seeking refuge in the precious
metal for most of the week amid worries about whether Cyprus
could secure a bailout from the European Union.
    "The appeal of gold could return after a delay, as occurred
in the immediate aftermath of the financial crisis in 2008. But
should gold fail to respond, it is running out of catalysts to
drive prices higher," said Suki Cooper, precious metals
strategist at Barclays Capital.
    Silver dropped 1.5 percent, wiping out the previous
session's rally.
    Rebounding equities on Wall Street further pressured bullion
after Cyprus agreed with Greece on a takeover of the Greek units
of Cypriot banks, ending uncertainty over the fate of those
operations.  
    Spot gold was down 0.4 percent at $1,607.31 an ounce
by 3:07 p.m. EDT (1907 GMT). 
    U.S. gold futures for April delivery settled down
$7.70 at $1,606.10 an ounce, with trading volume about 20
percent below its 250-day average, preliminary Reuters data
showed. 
    Cyprus is scrambling to avoid a meltdown of its banking
system and a possible exit from the euro, facing a deadline from
the European Union of Monday to raise 5.8 billion euros to
secure a 10 billion euro ($13 billion) international lifeline. 
    "The lack of a bailout deal leaves us positive on gold for
the short term," said James Steel, chief precious metals analyst
at HSBC.
    On Thursday, gold hit its highest since Feb. 26 at $1,616.36
an ounce, as the Cyprus crisis helped lift gold out of a
downtrend due to an improving economic outlook that sent prices
to a seven-month low in February.
    Gold's 12-year bull run has benefited in the last three
years from the euro zone crisis. It culminated to a record high
of $1,920 an ounce in September 2011 as fears about Greece's
debt problems boosted bullion prices while equities plunged.
    Also underpinning prices was a warning by Fitch Ratings that
Britain could lose its AAA rating, citing high government debt
levels and weak growth. 
    Silver fell 1.5 percent to $28.69 an ounce.    
    
    TECHNICALS, GOLD ETF OUTFLOWS
    If a bailout agreement on Cyprus is not reached, analysts
said, the metal could again look at piercing resistance at
$1,620 an ounce, a price unseen since the end of February. A
break above that level could also rekindle enthusiasm in
trading.
    There is also considerable pressure from the continuous
outflow from gold-backed exchange-traded funds. Holdings of
these funds are seen as a barometer of investment interest in
gold.
    Holdings of SPDR Gold Trust, the world's largest gold
ETF, fell 0.9 tonnes from the previous session to 1,221.26
tonnes on Thursday, the lowest since July 2011. The gold ETF is
headed for a 12th week of outflows.
    Among platinum group metals, platinum climbed 0.2
percent to $1,580.24, while palladium rose 0.6 percent to
$758.22.
 3:07 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold APR   1606.10  -7.70  -0.5  1602.60 1615.30  120,167
 US Silver MAY  28.698 -0.514  -1.8   28.505  29.170   36,540
 US Plat APR   1581.70   1.60   0.1  1568.00 1586.70   10,723
 US Pall JUN    761.55   4.70   0.6   751.00  762.40    2,365
                                                              
 Gold          1607.31  -6.78  -0.4  1604.25 1615.85         
 Silver         28.690 -0.440  -1.5   28.570  29.170
 Platinum      1580.24   2.87   0.2  1572.00 1583.50
 Palladium      758.22   4.72   0.6   753.02  758.75
                                                              
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        167,840   194,099   175,361     12.85   -0.17
 US Silver       40,399    59,909    52,149     18.91   -2.42
 US Platinum     17,559    14,663    11,080     15.46    0.51
 US Palladium     2,401     8,244     5,246                  
                                                              
 

 (Additional reporting by Clara Denina in London; Editing by
Veronica Brown, Anthony Barker and David Gregorio)