PRECIOUS-Gold rebounds after hitting 1-week low on Cyprus deal

Mon Mar 25, 2013 4:15am EDT

* Gold to retest $1,550 in 3 months -technicals
 
    * Hedge funds, money managers raise bullish bets in gold
    * Coming Up: Fed Chairman Bernanke speaks; 1715 GMT

 (Adds quotes, updates prices)
    By Lewa Pardomuan
    SINGAPORE, March 25 (Reuters) - Purchases from jewellery
makers in Asia plucked gold from a 1-week low on Monday as
investors turned to equities after Cyprus struck a last-minute
bailout deal with lenders.
    Investors had flocked to gold earlier this month as the
crisis in Cyprus re-ignited euro zone debt fears, sending
bullion prices to a 1-month high around $1,616 an ounce last
week. But the deal with international lenders averted a collapse
of the island's banking system, and safe haven gold lost its
appeal, with physical buyers emerging to snap up bargains.
    Gold was little changed at $1,607.96 an ounce by 0711
GMT after earlier hitting $1,602.59, its weakest since March 19.
    "With the price behaving like a yo-yo in this kind of range,
what we are seeing is just buying on dips," said a dealer in
Singapore. "If it goes back up to $1,612 or above, people will
sell."
    The precious metal touched a record high of around $1,920 in
September 2011, when a worsening debt crisis in Europe sparked a
buying rush. Gold's 12-year bull run has benefited in the last
three years from the euro zone crisis.
    U.S. gold futures for April delivery was at
$1,607.30 an ounce, up 1.20.   
    
    Gold was also supported as the euro firmed after the Cyprus
deal, which involves winding down Popular Bank of Cyprus, also
known as Laiki, and shifting deposits below 100,000 euros to the
Bank of Cyprus to create a "good bank". .
    The agreement between Cyprus and the lenders came hours
before a deadline to avert a collapse of the banking system in
negotiations between President Nicos Anastasiades and heads of
the European Union, the European Central Bank and the
International Monetary Fund. 
    Failure to clinch a deal could cause a financial market
selloff, but some analysts said the island's small size - it
accounts for just 0.2 percent of the euro zone's economic output
- meant contagion would be limited. 
    "After all, Cyprus is such a small economy. People were
getting more and more certain a deal would eventually be
struck," said Joyce Liu, an investment analyst at Phillip
Futures, referring to the intraday low.
    "If you look at the chart, I would say there is still
weakness in gold prices because it has failed to break $1,620,"
she added.
    The physical gold market saw buying interest after prices
dipped, keeping premiums for bullion bars steady in Hong Kong at
 $1.20 to $1.50 an ounce above spot prices and at $1.20 in
Singapore. 
    "There's light buying at below $1,610. I think sentiment is
a bit mixed because people may want to concentrate on the stock
markets. They liquidate ETF and buy the money to buy shares," a
dealer in Hong Kong said.
    Hedge funds and money managers raised their bullish bets in
gold by 63 percent in the week ending March 19, Commodity
Futures Trading Commission data showed on Friday.
 
    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. 
   
  Precious metals prices 0711 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1607.96    0.01   +0.00     -3.98
  Spot Silver        28.77    0.10   +0.35     -4.99
  Spot Platinum    1581.00    1.50   +0.09      3.00
  Spot Palladium    760.00    2.15   +0.28      9.83
  COMEX GOLD APR3  1607.30    1.20   +0.07     -4.09        21862
  COMEX SILVER MAY3  28.81    0.11   +0.39     -4.70         5571
  Euro/Dollar       1.3025
  Dollar/Yen         94.72
 
  COMEX gold and silver contracts show the most active months
 
 
 (Additional reporting by Rujun Shen; Editing by Himani Sarkar
and Tom Hogue)
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.