PRECIOUS-Gold jumps more than 2 pct on technical buying

Mon Apr 22, 2013 3:22am EDT

* Futures rise more than 2 pct, break above $1,400
    * Gold to test resistance at $1,424 -technicals
 
    * Coming Up: Euro zone Consumer confidence; 1400 GMT


    By Lewa Pardomuan
    SINGAPORE, April 22 (Reuters) - Gold jumped more than 2
percent on Monday after a rebound above $1,400 ignited technical
buying, but sentiment was shaky as steady outflows from
exchange-traded funds trimmed their bullion holdings to the
lowest in three years.
    The technical outlook for gold, which has plunged more than
15 percent so far this year, is yet to improve although the
safe-haven asset could find support from a rush in physical
buying in Asia and other parts of the world. [ID:nL3N0D6EQJ
    "It remains to be seen which of these offsetting forces
eventually wins out and exerts its influence over gold prices,"
said Edward Meir, metals analyst at futures brokerage INTL
FCStone.
    "Our guess is that the sharp bounce in retail buying will
likely dominate and succeed in sending prices higher over the
course of the next week or two." 
    Spot gold added $16.21 an ounce to $1,420.06 by 0631
GMT after rising as high as $1,427.20.
    It posted its biggest-ever daily loss in dollar terms last
Monday, shocking veteran investors, who see gold as portfolio
protection against inflation and other market risks. Prices sank
to around $1,321 on April 16, its lowest in more than 2 years. 
    U.S. gold futures, which often dictate the spot market, hit
a high of 1,427.3 an ounce, up 2.3 percent from the previous
close of 1,395.60. The June delivery later stood at
$1,419.80, up $24.20.
    
    "The aggressiveness of the fall suggests that we are still
in a consolidation rather in a reversal role. For me, the $1,435
level is likely to provide resistance," said Tim Riddell, head
of ANZ Global Markets Research, Asia. 
    "We really need to get back into the $1,500s to say that
there's something more substantial taking place. The close above
$1,400 may have taken the negative pressure out of gold in the
near term. A close below that level will heighten the risks of
new lows," Riddell added. 
    
    ETF OUTFLOWS
    Gold has failed to react to tension in the Korean peninsula,
with its safe-haven appeal dented by expectations the U.S.
Federal Reserve will soon end its bullion-friendly bond buying
programme, which could ease inflationary pressure.
    The precious metal had rallied to an 11-month high in
October last year after the Fed announced its third round of
aggressive economic stimulus, raising fears the central bank's
money-printing to buy assets would stoke inflation.
    Outflows on exchange-traded funds could also indicate that
investors were parking their money elsewhere, although last
week's trading data from the Unites States showed that funds had
injected new money into gold futures. 
    Hedge funds and money managers raised their net longs in
gold futures and options in the week to April 16, a report by
Commodity Futures Trading Commission (CFTC) showed on Friday, as
new money entered the market at lower prices. 
    But holdings of the largest gold-backed
exchange-traded-fund, New York's SPDR Gold Trust, dropped
0.88 percent on Friday from Thursday, while those of the largest
silver-backed ETF, New York's iShares Silver Trust,
remained unchanged for the same period. 
 
    Gold prices have also come under pressure due to Cyprus'
plan to sell excess gold reserves to raise around 400 million
euros ($523 million), which led to speculation other indebted
euro zone countries could follow suit.
    In other markets, Japanese shares powered to nearly 5-year
highs and determined sellers just failed to breach the symbolic
100 yen/dollar level on Monday, even though the Bank of Japan's
bold reflationary plans were endorsed by the Group of 20
gatherings in Washington. 
       
  Precious metals prices 0631 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1420.06   16.21   +1.15    -15.20
  Spot Silver        23.40    0.23   +0.99    -22.72
  Spot Platinum    1425.50    3.50   +0.25     -7.13
  Spot Palladium    671.97   -0.03   -0.00     -2.89
  COMEX GOLD JUN3  1419.80   24.20   +1.73    -15.28        40381
  COMEX SILVER MAY3  23.40    0.43   +1.89    -22.61         9249
  Euro/Dollar       1.3056
  Dollar/Yen         99.74
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