PRECIOUS-Gold up 2 percent on dollar slide, weak U.S. data

Mon Jun 3, 2013 4:12pm EDT

* U.S. ISM manufacturing index contracts in May
    * Short covering lifts gold after previous session drop
    * Platinum rallies on supply fears, S.Africa mine violence
    * Coming up: US international trade data Tuesday

 (Adds comment, market details, updates prices)
    By Frank Tang and Clara Denina 
    NEW YORK/LONDON, June 3 (Reuters) - Gold jumped nearly 2
percent on Monday, hitting its highest in more than two weeks,
boosted by a tumbling dollar and disappointing U.S.
manufacturing data.
    The precious metal climbed and U.S. equities fell after data
showed the U.S. manufacturing sector contracted in May for the
first time in six months.  
    Gold and other dollar-denominated commodities gained across
the board after the U.S. dollar index dropped around 1
percent against six major currencies.  
    "It's a currency move," said Bill O'Neill, partner of
commodities investment firm LOGIC Advisors.    
    Spot gold was up 1.8 percent to $1,410.59 an ounce by
3:04 p.m. EDT (1904 GMT), having hit a session high of
$1,416.11, its highest since May 15.
    U.S. Comex gold futures settled up $18.90 to
$1,411.90 an ounce, with trading volume about 40 percent below
its 30-day average, preliminary data showed.
    On Friday, bullion fell almost 2 percent, its steepest daily
decline in about two weeks.
    Open interest (OI) in U.S. gold futures fell to the lowest
in almost four years, after last's week sharp drop on option
expiration and decreasing fund interest. 
    Jeffrey Sica, chief investment officer at Sica Wealth, which
oversees $1 billion in client assets, cited short covering for
the drop in OI. He said that more investors are now using put
option strategies to hedge against their bullion investments.

    NONFARM PAYROLLS EYED
    U.S. economic data will remain in focus this week, as
Friday's non-farm payroll data for May will provide investors
with more clues about how long the Federal Reserve might keep
U.S. stimulus measures in place.
    Strong physical demand appears to keep underpinning gold,
with India importing a much higher-than-expected 162 tonnes of
gold in May. 
    In May, however, sales of the U.S. Mint's American Eagle
gold coins fell to 70,000 ounces versus 209,500 ounces in April,
after a brief suspension halted the Mint's sales of the
one-tenth ounce bullion coins.
    Declines in the holdings of SPDR Gold Trust, the
world's largest gold-backed exchange traded fund, have stopped
after nearly three weeks. Holdings rose last Wednesday and have
been unchanged since. 
    Silver jumped 2.4 percent to $22.74 an ounce on
gold's rally.
    Platinum rose sharply on supply worries after news of a
fatal shooting at Lonmin platinum mine in top producer South
Africa. 
    Platinum jumped 2.6 percent to $1,493.74 an ounce,
while palladium edged up 0.5 percent to $752.22 an ounce.
    The platinum group metals market was digesting the latest
U.S. auto sales data which showed an 8 percent gain in May on
strong pickup truck sales and an improving housing market.
 
    
 3:04 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold AUG   1411.90  18.90   1.4  1388.30 1416.50  131,232
 US Silver JUL  22.721  0.478   2.1   22.175  22.915   39,775
 US Plat JUL   1497.40  35.60   2.4  1456.60 1505.60   12,864
 US Pall SEP    759.05   5.40   0.7   748.65  763.00    3,457
                                                               
 Gold          1410.59  24.70   1.8  1389.68 1416.11         
 Silver         22.740  0.530   2.4   22.310  22.960
 Platinum      1493.74  38.24   2.6  1461.00 1503.50
 Palladium      752.22   3.72   0.5   750.00  760.00
                                                               
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        139,955   230,119   181,792     21.27    0.21
 US Silver       44,871    63,237    55,512     31.79   -1.74
 US Platinum     13,972    11,056    11,651     22.49   -0.01
 US Palladium     3,543     6,650     5,568                  
                                                               
 

 (Additional reporting by A. Ananthalakshmi in Singapore;
Editing by William Hardy, David Gregorio and Chris Reese)
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