PRECIOUS-Gold gives up early gains, off 1-week high

Tue Apr 23, 2013 2:52am EDT

* Gold to gain more to $1,456-technicals 
    * Tight supply boosts gold bar premiums in Singapore, Hong
Kong
    * Coming Up:U.S. ICSC weekly chain store sales; 1145 GMT


    By Lewa Pardomuan
    SINGAPORE, April 23 (Reuters) - Bullion reversed early gains
on Tuesday, coming off a 1-week peak touched in the previous
session, as more outflows from gold exchange-traded funds (ETFs)
summed up investors' weakening confidence in the precious metal.
    Investors were still licking their wounds after gold posted
its biggest-ever daily loss in dollar terms last Monday in a
brutal sell-off that surprised ardent gold investors and bulls.
    "From a technical stand point, there are still downside
risks to gold prices. I suspect we haven't really seen the
market turning around to be bullish in gold prices just yet,"
said CIMB regional economist Song Seng Wun.
    Gold hit a session high of $1,431.31 an ounce but
gave up gains and stood at $1,416.26 by 0624 GMT, down $8.88.
Prices sank to around $1,321 on April 16, its lowest in more
than 2 years. Gold has dropped around 15 percent this year.
    U.S. gold futures for June delivery stood at
$1,415.40 an ounce, down $5.80.
    But the recent sharp drop in prices and an uneven rebound
has attracted buying interest in Asia, sending premiums for gold
bars in Singapore to the highest since 2008. 
    
    Gold has been caught in a tug-of-war between physical buyers
seeking bargains and wary investors cutting exposure to the
precious metal on nagging worries about central bank sales and
prospects of easing inflation.
    Physical buying persisted in Asia even though spot gold has
rebounded more than $100 from last week's lows, keeping premiums
for gold bars at multi-month highs in Singapore and Hong Kong as
supply also tightened for coins and other products. 
    "If you want gold real quick, you have to pay big premiums.
People are still buying gold, and India is coming in. But
Thailand is slow because they are waiting for prices to come off
again," said a dealer in Singapore.
    India, the world's largest gold consumer, celebrates Akshaya
Tritiya, a key gold-buying festival, next month, while the
wedding season will continue till early June. Indian parents
give gold jewellery to their daughters at weddings as a custom.
    
    ETF OUTFLOWS
    Dealers, still puzzled by the steady outflows from gold
ETFs, barely reacted to disappointing manufacturing data from
China, which suggests the world's second-largest economy faces
global headwinds into the second quarter. 
    Holdings on SPDR Gold Trust, the world's largest
gold-backed exchange-traded fund, tumbled to their lowest level
since early 2010, which indicated that some investors were
shifting their money into equities. 
    The typically safe-haven precious metal has failed to react
to tensions in the Korean peninsula and recent bombings at the
Boston Marathon, which killed three people and wounded more than
200. 
    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, Asia shares and other riskier assets fell
back while the yen rose broadly after data showed China's
manufacturing growth slowed in April, underscoring market
concerns about global growth prospects.    
    
  Precious metals prices 0624 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1416.26   -8.88   -0.62    -15.42
  Spot Silver        22.87   -0.51   -2.18    -24.47
  Spot Platinum    1419.49   -9.01   -0.63     -7.53
  Spot Palladium    667.72  -12.78   -1.88     -3.51
  COMEX GOLD JUN3  1415.40   -5.80   -0.41    -15.54        33553
  COMEX SILVER MAY3  22.82   -0.50   -2.16    -24.51        11010
  Euro/Dollar       1.3040
  Dollar/Yen         98.65
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