PRECIOUS-Gold holds near 1-week low, ETFs outflows persist

Thu May 2, 2013 2:18am EDT

* ETFs holdings lowest since September 2009
    * Gold shrugs off Fed's decision to maintain policy
    * Coming Up: U.S. weekly jobless claims; 1230 GMT

 (Updates prices)
    By Lewa Pardomuan
    SINGAPORE, May 2 (Reuters) - Gold held near its weakest
level in almost a week on Thursday, after declines in holdings
of exchange-traded funds, equities and other commodities
overshadowed the U.S. Federal Reserve's decision to maintain its
loose monetary policy.
    Although the Fed's money-printing to buy assets could stoke
inflation, gold has been overwhelmed by fears of sales by
central banks and a drop in global bullion ETF holdings to their
lowest since September 2009. 
    Gold fell $3.05 an ounce to $1,453.69, having shed
more than 1 percent in the previous session -- its biggest daily
drop since bullion's historic decline in mid-April. It hit a low
of $1,439.74 on Wednesday, the weakest since April 25.
    Prices dropped $225 an ounce between April 12 and 16 on
fears of a withdrawal of the Fed's monetary stimulus and after
the European Central Bank and the International Monetary Fund
asked Cyprus to sell reserves as part of a bailout deal.
 
    "People are more wary as gold has been trading within the
same trading band. Moreover, Europe has agreed on a loan deal
for Cyprus, and one of the terms state that assets in gold might
be sold," said Brian Lan, managing director of GoldSilver
Central Pte Ltd in Singapore.
    "But this is unlikely to be sold on the open market. I
believe another central bank will be buying it. China's physical
demand is still strong. This morning they are most probably
keeping a lookout to see where the market is going before
purchasing."  
    U.S. gold for June delivery stood at $1,453.70 an
ounce, up $7.50.   
    In its statement following a two-day meeting, the Fed
reiterated it would continue to buy $85 billion worth of bonds
each month to support a moderately expanding economy that still
has too high an unemployment rate. 
    But instead of rallying on the news, gold tracked other
markets lower on renewed worries over the Chinese and U.S.
economies after the latest economic data from both countries 
raised doubts about the strength of the global economy.
    China's factory-sector growth eased in April as new export
orders fell for the first time this year, a private survey
showed on Thursday, suggesting the euro zone recession and
sluggish U.S. demand may be risks to China's economic recovery.
 
    Investors are now waiting for U.S. non-farm payrolls report
for April scheduled for release on Friday, which will signal the
longer-term prospects for the Fed's monetary stimulus.
    The U.S. economy is likely to have added 145,000 jobs.
March's number fell far short of expectations at 88,000,
triggering a sell-off in riskier assets.
       
    PHYSICAL MARKET 
    Physical market activity slowed after a recent surge in the
purchase of gold bars, coins and nuggets across Asia sent
premiums for gold bars to multi-year highs. 
    Dealers expected second-largest consumer China to look for
bargains as markets resumed trading after a three-day holiday,
but the physical market in Hong Kong was easier than a week ago,
as new supplies arrived.
    "Supply is a bit better, because demand has also slowed down
a little bit. Premiums for gold bars are still steady at $3 an
ounce," said a dealer in Hong Kong, which is China's main source
for gold imports.
    Gold's historic sell-off last month has widened a disconnect
between funds that sold on dissatisfaction over bullion's
underperformance and individual investors who could not get
enough physical gold coins and bars at bargain prices.
 
    In other markets, weak Chinese manufacturing data reinforced
doubts over the health of global economies and pushed Asian
shares lower on Thursday, as investors cautiously awaited a
European Central Bank meeting that could see interest rates cut
to support growth. 
       
  Precious metals prices 0605 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1453.69   -3.05   -0.21    -13.19
  Spot Silver        23.44   -0.09   -0.38    -22.59
  Spot Platinum    1471.99    0.99   +0.07     -4.10
  Spot Palladium    682.47   -3.03   -0.44     -1.38
  COMEX GOLD JUN3  1453.70    7.50   +0.52    -13.25        19155
  COMEX SILVER JUL3  23.47    0.12   +0.52    -22.38         5131
  Euro/Dollar       1.3178
  Dollar/Yen         97.27
 
  COMEX gold and silver contracts show the most active months
 
 (Editing by Clarence Fernandez and Himani Sarkar)
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