PRECIOUS-Gold rises 1 pct on physical demand, drop in equities
* Downside possible as data suggests Fed may cut bond buys * Premiums on gold kilobars reach record high in Singapore * Asian demand to hit quarterly record in Q2 - trade group (Updates throughout; adds comment, market details, second byline, NEW YORK dateline) By Frank Tang and Veronica Brown NEW YORK/LONDON, May 29 (Reuters) - Gold rose around 1 percent on Wednesday, reversing the previous session's losses as a dollar drop and declines in equities triggered physical buying. But analysts said the root of weakness in wider markets - improved U.S. data suggesting the Federal Reserve might taper its monetary stimulus - was also seen as a catalyst ultimately to take bullion prices lower. Bullion also faced technical pressure as its rally faded near its 14-day moving average for a second straight day, while persistent outflows from gold-backed exchange-traded funds (ETFs) were expected to heap more pressure on prices. For now, lower prices of the precious metal are luring physical buyers across Asia, with premiums for gold bars in Singapore hitting a record high. "Without the pressure of the dollar strength and firmer equities, gold is rising today on strong Asian physical demand," said David Meger, director of metals trading at Vision Financial Markets. "Pretty much any dips have been met in adequate buying," Meger said. Spot gold was up 0.9 percent at $1,391.30 an ounce by 2:24 p.m. EDT (1824 GMT), after falling in the previous session as equity markets rose on strong U.S. home sales and consumer confidence data. Trading volume was around 25 percent above its 30-day average, preliminary Reuters data showed, driven by June-August contract rollover ahead of June's first-notice day on Friday. U.S. stocks retreated from record levels on concerns that the Fed may start to ease up on its stimulus program. ASIA BRIGHT SPOT Gold dealers in Asia have been facing a tough time bringing physical supplies to meet demand after the metal's historic selloff in mid-April sent prices to two-year lows. Premiums for gold kilogram bars in Singapore hit a record high at $7 an ounce over spot London prices, while premiums in Hong Kong ranged between $4 and $5 an ounce. Gold futures in Shanghai are about $25 more than spot gold, indicating strong demand in China, the world's No. 2 consumer after India. In contrast, holdings at SPDR Gold Trust, the world's largest gold-backed ETF, fell to 1,012.25 tonnes on Tuesday, their lowest since February 2009. The World Gold Council, an industry group, said on Wednesday Asian gold demand from this April to June will reach a quarterly record as bullion consumers in the region take possession of supply freed up by selling from ETFs. Among other metals, silver firmed 0.9 percent to $22.44 an ounce, platinum fell 0.4 percent to $1,451 an ounce and palladium slipped 0.9 percent to $748 an ounce. 2:24 PM EDT LAST/ NET PCT LOW HIGH CURRENT SETTLE CHNG CHNG VOL US Gold JUN 1391.30 12.40 0.9 1379.10 1393.80 142,419 US Silver JUL 22.453 0.260 1.2 22.130 22.470 24,760 US Plat JUL 1453.00 -8.80 -0.6 1451.40 1468.00 7,927 US Pall JUN 747.80 -9.20 -1.2 744.55 756.45 6,774 Gold 1392.61 12.36 0.9 1380.75 1394.04 Silver 22.470 0.240 1.1 22.210 22.500 Platinum 1451.74 -5.76 -0.4 1454.50 1466.00 Palladium 747.50 -7.50 -1.0 747.77 755.72 TOTAL MARKET VOLUME 30-D ATM VOLATILITY CURRENT 30D AVG 250D AVG CURRENT CHG US Gold 279,313 228,790 181,137 22.03 -1.56 US Silver 27,379 69,628 55,403 33.53 -2.58 US Platinum 8,750 11,476 11,820 23.1 -0.34 US Palladium 15,030 6,537 5,217 (Additional reporting by Clara Denina in London; Editing by Dale Hudson and James Jukwey)
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