PRECIOUS-Gold drops 1 pct to near 2-week low as dollar firms

Mon May 13, 2013 2:36am EDT

* Gold down 1 pct to near 2-week low
    * ETF gold holdings slip again
    * Spot gold targets $1,395 -technicals 

 (Updates prices, adds quotes)
    By Lewa Pardomuan
    SINGAPORE, May 13 (Reuters) - Gold fell more than 1 percent
on Monday, holding near its weakest level in two weeks, as the
dollar firmed on signs of an improving U.S. job market and as
holdings in exchange-traded funds slipped again. 
    Bullion's safe-haven appeal has been dimmed by speculation
the Federal Reserve could scale back its aggressive monetary
stimulus after recent U.S. labour market data pointed to a
steady recovery trend in the world's largest economy.
    Gold had dropped $11.94 an ounce to $1435.76 by 0610
GMT, nearing Friday's low of $1,420.61, its weakest since April
24. Gold has fallen more than 14 percent this year as investors
switch funds into a rallying equity market and the greenback.
    "So far, nothing in the market bodes well for an upside in
gold. Gold needs to break above $1,487 to show an upward
correction," said Joyce Liu, an investment analyst at Phillip
Futures in Singapore.
    "CFTC data shows an increase in bearish bets in gold, so
that sends another bearish signal to retail speculators, who
have no idea what the funds' view on gold is. There's probably
some technical selling because we've broken below $1,440."  
     Hedge funds and money managers trimmed their bullish bets
in gold futures and options in the week to May 7 on weaker
bullion prices and outflows in gold exchange-traded funds, a
report by the Commodity Futures Trading Commission (CFTC) showed
on Friday. 
     SPDR Gold Trust, the world's largest gold-backed
exchange-traded fund (ETF), said its holdings fell 0.24 percent
to 1051.65 tonnes on Friday after rising slightly on Thursday.
The holdings were within sight of a four-year low. 
    
    
    U.S. gold for June delivery was at $1,434.60 an
ounce, down $2.00. Gold shrugged off Chinese data which showed
output growth quickened in April, but still missed market
expectations. 
    "Gold is under pressure from the strong dollar and outflows
from ETFs," said a dealer in Hong Kong. "Gold will be trending
for a while at $1,400 or above, but we think it could go down to
$1,380."     
    Cash and U.S. gold futures plunged to around $1,321 on April
16, their lowest in over two years, after worries about central
bank sales and a drop below $1,500 led to a sell-off that
stunned investors, prompting them to slash ETF holdings
     Oil fell on Monday as the dollar strengthened, weighing on
Asian shares, but Japanese equities outperformed on the back of
the yen's slide to a fresh 4-1/2-year low against the U.S.
currency. 
     Bullion hit 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.
    Silver, platinum and palladium tracked
gold lower. 
    Palladium prices hit their highest versus platinum in a
decade this year as prospects for a growing deficit attracted
buying, but an overhang of above-ground stocks is stopping its
appealing fundamentals from fully feeding into prices.
 
            
  Precious metals prices 0610 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1435.76  -11.94   -0.82    -14.26
  Spot Silver        23.69   -0.13   -0.55    -21.76
  Spot Platinum    1488.50   -2.00   -0.13     -3.03
  Spot Palladium    702.47   -1.03   -0.15      1.51
  COMEX GOLD JUN3  1434.60   -2.00   -0.14    -14.39        35742
  COMEX SILVER JUL3  23.67    0.01   +0.03    -21.72         6979
  Euro/Dollar       1.2984
  Dollar/Yen        101.65
 
  COMEX gold and silver contracts show the most active months
 
    
    
    
    

 (Additional reporting by  A. Ananthalakshmi; Editing by Richard
Pullin and Joseph Radford)
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