PRECIOUS-Gold ticks lower as equities gain, ETFs plunge

Tue May 7, 2013 2:50am EDT

* Gold to revisit low of $1,439.74 -technicals
 
    * ETFs holdings fall to lowest since August 2009
    * Coming Up: U.S. ICSC weekly chain store sales; 1145 GMT

 (Updates prices, adds quotes)
    By Lewa Pardomuan
    SINGAPORE, May 7 (Reuters) - Gold eased on Tuesday, losing
its shine as an alternative investment after stock markets
rallied on hopes for a steady U.S. recovery, and as holdings on
bullion exchange-traded funds slipped to their lowest in more
than three years.
    Although physical buying has helped gold rebound from a
2-year low hit in April, daily outflows on ETFs reflect
investors' sagging interest in the metal, which has fallen more
than 12 percent in 2013 after rising for each of the past 12
years.
    Gold eased $6.45 an ounce to $1,462.44 by 0609 GMT.
It rose to a near three-week high of $1,487.80 on Friday on
safe-haven buying spurred by a cut in interest rates by the
European Central Bank and the U.S. Federal Reserve's decision to
stick to its stimulus programme.
    "I think sentiment is quite mixed. Physical demand supports
gold but you can see some liquidation in the market," said Peter
Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.
    "Gold in the medium-term is still a little bit bearish. You
can see holdings on SPDR are still down about 3 to 4 tonnes
every day." 
    SPDR Gold Trust, the world's largest gold-backed
exchange-traded fund, said its holdings fell 0.31 percent to
1062.30 tonnes on Monday - the lowest since August 2009. In
terms of ounces, holdings fell to 34,153,901.
 
    Gold plunged to around $1,321 on April 16, its lowest in
more than two years, after a drop below $1,500 and fears of
central bank sales led to a sell-off that stunned investors and
prompted them to slash holdings of exchange-traded funds. 
    The price drop ignited a buying frenzy in Asia and other
parts of the world, leading to a shortage of gold bars, coins
and nuggets in Hong Kong, Singapore and Tokyo, and helping the
metal stage a rebound.
    But gold's failure to revisit the psychological $1,500 level
suggested that funds were still on the sidelines. 
     U.S. gold for June delivery was at $1462.10 an
ounce, down $5.90. 
    
    "We expect the physical demand to support the market, but
(that) could prove difficult to maintain in the face of rallying
equity markets, ETF outflows and speculative financial shorts,"
said ANZ in a report.
    "Additionally, global inflation concerns that could support
gold are benign. We expect to see a pick-up in prices through
the second half of 2013, where gold should trade in the mid-high
1,500 an ounce area."
    ANZ, which cut commodity price forecasts on Tuesday, sees
gold averaging at $1,573 in 2013 and $1,648 in 2014.
 
    But it said gold would drift lower in the near term.
    Spot gold is expected to revisit its May 1 low of $1,439.74,
according to Reuters technical analyst Wang Tao. 
    "Physical supply is still a bit tight. The world is happy to
buy gold, especially when prices were below $1,400. But gold is
reluctant to go above $1,475 because of the ETFs," said a dealer
in Hong Kong, referring to the outflows in exchange-traded
funds.
    Dealers awaited the release of Hong Kong's gold exports data
to mainland China in March, due later in the day. The net flow
to China rebounded in February from three-month lows in January,
reflecting increased demand ahead of the Lunar New Year. 
  
    In other markets, Asian shares were capped on Tuesday by
caution over weak global growth data, but Japanese equities
scaled a near five-year peak after the Standard & Poor's 500
Index closed at a record high overnight. 
       
  Precious metals prices 0609 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1462.44   -6.45   -0.44    -12.67
  Spot Silver        23.65   -0.33   -1.38    -21.90
  Spot Platinum    1490.50  -12.00   -0.80     -2.90
  Spot Palladium    687.72   -3.78   -0.55     -0.62
  COMEX GOLD JUN3  1462.10   -5.90   -0.40    -12.75        24521
  COMEX SILVER JUL3  23.63   -0.33   -1.38    -21.85         7502
  Euro/Dollar       1.3079
  Dollar/Yen         99.05
 
  COMEX gold and silver contracts show the most active months
 
 (Editing by Richard Pullin and Tom Hogue)
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