PRECIOUS-Gold up in roller-coaster trade, sentiment stays uneasy

Thu Apr 18, 2013 4:22pm EDT

* Physical buying surges in Asia, U.S. coin sales soar
    * Weaker U.S. equities, recovery in commodities aid rise
    * Gold ETF holdings drop
    * Coming up: CFTC Commitments of Traders report Friday

 (Updates throughout, adds comment, market details)
    By Frank Tang and Veronica Brown
    NEW YORK/LONDON, April 18 (Reuters) - Gold rose on Thursday
on better physical demand but buyers stayed cautious following
the metal's historic sell-off earlier in the week.
    Bullion rebounded sharply after falling almost 3 percent in
Asian trade on news that holdings of the world's largest
exchange-traded fund, the SPDR Gold Trust, had dropped 1
percent to their lowest level in three years. 
    Signs of improving physical demand at lower prices,
including a spate of buying of gold bars, coins and nuggets in
Asia, and very strong U.S. gold coins sales, lifted the market. 
 
    A pullback in U.S. equities on disappointing U.S. weekly
jobless claims and factory data, combined with a broad recovery
in commodities that was led by crude oil also supported gold's
inflation-hedge appeal. 
    Sentiment among gold investors remains shaken as bullion's
sharp losses prompted markets to question the metal's
traditional status as a safe haven.
    "Weakness in the equity market will likely see some longs
reenter gold. It may be a long time before the yellow
metal gives many the feeling of safety," said Carlos
Perez-Santalla at commodities broker Marex Spectron.
    Spot gold was down 0.8 percent at $1,387.50 an ounce
at 3:37 p.m. EDT (1937 GMT), having earlier hit a low of
$1,339.86.
    The market fell by a combined $225 on Friday and Monday,
which compares with a total trading range of $260 in 2012.
    It is down about 18 percent so far this year, and at risk of
posting its first annual loss after 12 consecutive years of
gains.
    "Volatility is likely to remain very high in the next few
sessions," Commerzbank analyst Daniel Briesemann said.
    Azerbaijan's $34 billion state oil fund is planning to add
another 12 tonnes of gold to reach reserves of 30 tonnes, the
fund's executive director told Reuters, news that helped support
the market. 
    U.S. Comex gold futures for June delivery settled up
$9.80 at $1,392.50, with trading volume in line with the 30-day
average, preliminary Reuters data showed.

    UNEASE
    Buyers were wary of entering the market. Many feared hedge
fund manager John Paulson, a prominent gold bull, might have
liquidated his huge gold stake after the metal's rout.
    Paulson's Advantage Fund, one of the hedge fund manager's
biggest portfolios, is down 2.4 percent in April, largely due to
the sharp selloff in gold, a source familiar with the numbers
said on Thursday. 
    However, Paulson partner John Reade said earlier this week
that the recent gold pullback has not changed the firm's bullish
outlook.
    Premiums for gold bars in Hong Kong were at $1.90 to $2.00
an ounce to spot, their highest level since early last year.
Premiums in Singapore and Tokyo were also at multi-months highs.
 
    Among other precious metals, silver eased 0.6 percent
to $23.13, platinum was down 0.1 percent at $1,420, and
palladium rose 0.5 percent to $665.72.
 3:37 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold JUN   1392.50   9.80   0.7  1335.60 1402.00  224,422
 US Silver MAY  23.245 -0.062  -0.3   22.435  23.655   62,711
 US Plat JUL   1429.00  -6.40  -0.4  1403.10 1444.30   10,574
 US Pall JUN    669.80   8.40   1.3   654.00  676.95    3,748
                                                               
 Gold          1387.50  11.00   0.8  1340.63 1401.46         
 Silver         23.130 -0.140  -0.6   22.520  23.670
 Platinum      1420.00  -1.00  -0.1  1407.00 1441.50
 Palladium      665.72   3.22   0.5   656.00  675.50
                                                               
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        235,201   222,671   178,310     21.71   -2.29
 US Silver       80,031    60,047    54,087     36.11   -1.87
 US Platinum     10,646    15,962    12,095     21.34    1.81
 US Palladium     3,810     5,216     5,317                  
                                                               
 
 (Additonal reporting by Clara Denina in London and Lewa
Pardomuan in Singapore; editing by James Jukwey and Peter
Galloway)
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