PRECIOUS-Gold up, but drop for week is biggest since Sept 2011

Fri Jun 21, 2013 3:34pm EDT

* Spot gold falls 7 percent for the week
    * Open interest of U.S. gold futures up 3 pct after selloff
    * US Mint's American Eagle bullion coin sales quiet Thursday
    * Coming up: U.S. Chicago, Dallas manufacturing indexes
Monday

 (Updates throughout, adds comment, second byline, dateline, pvs
LONDON)
    By Frank Tang and Jan Harvey
    NEW YORK/LONDON, June 21 (Reuters) - Gold rose 1.3 percent
on Friday, rebounding from nearly a three-year low earlier, but
for the week it still dropped the most in nearly two years after
the U.S. Federal Reserve's most explicit indication to end its
stimulus sparked a global market rout.
    Despite Friday's gain, spot gold was still 7 percent lower
for the week, its biggest weekly decline since it fell from
record highs in September 2011. 
    Bargain hunting by investors and physical buyers helped
offset a 25 percent increase in the margins of U.S. gold
futures. Steadier U.S. equities and Treasuries markets also
allowed gold investors to take a breather following Thursday's
5.5 percent decline.   
    "We've had some forced selling in gold as a result of margin
calls in the equity markets. That had exacerbated selling
yesterday and allow the gold market to consolidate higher
today," said Bill O'Neill, partner of commodities investment
firm LOGIC Advisors.
    Open interest in U.S. Comex futures showed a surprise 3
percent increase after Thursday's sharp pullback, a sign that
possible short-covering could help boost gold prices in the near
term, O'Neill said.
    Spot gold was up 1.3 percent at $1,293.99 an ounce by
2:23 PM EDT (1823 GMT), having earlier hit its lowest since
September 2010 at $1,268.89 an ounce.
    U.S. Comex gold futures for August delivery settled
up $5.80 at $1,292 an ounce, with trading volume at 177,000 lots
versus its 30-day daily average at 208,000, preliminary Reuters
data showed.
    The CME Group Inc raised initial margins for Comex
gold futures after prices plunged to their lowest in three years
on Thursday, when U.S. gold futures ended 6.4 percent lower in
heavy trade. 

    GOLD ETF OUTFLOWS, PHYSICAL DEMAND MIXED
    Holdings of the world's largest physically backed gold
exchange-traded funds - a popular way to invest in bullion since
the financial crisis - have fallen more than 485 tonnes this
year, Reuters data showed. 
    The largest gold ETF, the SPDR Gold Trust, reported a
4.5-tonne drop in its holdings on Thursday, taking them to their
lowest in more than four years at 995.35 tonnes. That was 26
percent below their December 2012 peak of 1,353 tonnes.
 
    Sales performance at U.S. bullion dealers are largely mixed.
    The U.S. Mint said it sold 1,500 American Eagle one-ounce
gold bullion coins, and 60,000 one-ounce silver coins on
Thursday. Both gold and silver bullion coin sales came below
their 2013 daily average.
    American Precious Metals Exchange's APMEX Bullion Center on
eBay posted its second highest daily sales since its launch in
October 2012, said Michael Haynes, CEO of the bullion dealer.
    Physical buying in No. 1 bullion consumer India, however,
remained muted despite Thursday's price drop, in contrast to the
heavy buying seen after gold's April sell-off. 
    Silver also dropped to its lowest since September
2010 at $19.35. It last traded at $20.02 an ounce, up 2.4
percent. Platinum rose 1.2 percent to $1,372.49 an ounce,
while palladium gained 1.8 percent to $673.22 an ounce.

 2:23 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold AUG   1292.00   5.80   0.5  1268.70 1301.70  166,075
 US Silver JUL  19.959  0.136   0.7   19.310  20.065   55,418
 US Plat JUL   1369.50   5.70   0.4  1332.30 1375.50   17,507
 US Pall SEP    674.75   9.65   1.5   655.30  682.25    5,616
                                                               
 Gold          1293.99  16.25   1.3  1268.89 1302.30         
 Silver         20.020  0.460   2.4   19.350  20.130
 Platinum      1372.49  15.99   1.2  1337.00 1374.25
 Palladium      673.22  12.22   1.8   658.50  678.00
                                                               
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        176,782   207,951   180,458     26.09    4.36
 US Silver       79,099    55,473    56,645     40.47    8.17
 US Platinum     23,082    13,669    11,753     21.73   -0.17
 US Palladium     5,679     6,465     5,564                  
                                                               
 
 (Additional reporting by Siddesh Mayenkar in Mumbai; Editing by
William Hardy, Keiron Henderson and Steve Orlofsky)
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