PRECIOUS-Gold rises 1 pct on U.S. GDP data after sharp slide

Thu Jun 27, 2013 3:22am EDT

* Gold climbs as much as 1.6 percent
    * Bullion down 26 percent for the year
    * Asian shares gain, dollar falls 

 (Updates prices)
    By A. Ananthalakshmi
    SINGAPORE, June 27 (Reuters) - Gold edged higher on Thursday
after tumbling 12 percent over the past 8 sessions, as soft data
on U.S. economic growth eased fears of a quick end to the
Federal Reserve's monetary stimulus. 
    Bullion was still not far off Wednesday's near three-year
low, with its safe-haven appeal severely dented since Fed
Chairman Ben Bernanke laid out a strategy last week to wind down
the central bank's $85 billion monthly bond purchases over the
next few months.
    "Investor sentiment is still quite sour right now," said a
trader in Hong Kong. 
    "There is a lot of speculative fervour around gold. For
investors to come back in droves, we will need to see some
consolidation in prices and a return to an upper trending
market," the trader said.
    Spot gold rose 1.2 percent to $1,240.36 an ounce by
0701 GMT, after a 4 percent fall on Wednesday that took the
metal to $1,221.80, its lowest since August 2010. Silver,
which sank 5.5 percent in the previous session, gained about 2
percent. 
    Comex gold rose about $10 to $1,240, also near
3-year lows. 
    Prices were boosted by data on Wednesday that showed U.S.
gross domestic product expanded at a 1.8 percent annual rate in
the first quarter, compared with the previously reported 2.4
percent pace, lending a cautionary note on economic recovery.
 
    Gold and other commodities have benefitted significantly
from cheap central bank money over the years. Any pause in U.S.
economic recovery momentum would mean a delay in the Fed's
rollback of monetary easing and be positive for bullion.  
    Investors have pulled back from precious metals this year
due to gains in stock markets and the U.S. dollar. Gold is down
more than 26 percent for the year and is headed for its worst
quarterly performance since at least 1968. 
    ABN Amro was the latest to pare its gold price forecasts,
lowering its 2013 year-end gold forecast to $1,100 an ounce from
$1,300 and 2014 year-end price to $900 from $1,000, citing
liquidation in funds. 
    SPDR Gold Trust, the world's largest exchange-traded
gold fund, posted its second-biggest percentage drop in holdings
this year on Tuesday to its lowest levels in more than four
years. 
    "There is no reason for investors to hold precious metals as
the outlook for capital gains are dim and they pay no income,"
ABN Amro analyst Georgette Boele said in a note.
    Physical demand has also not picked up in top consumers
India and China as much as it did in mid-April when prices fell
the most in 30 years.
    India is reeling under the impact of new import curbs, while
Chinese markets are being rocked by fears over a credit crunch.
 
    Shanghai gold futures fell for an eighth straight
day.
   
  Precious metals prices 0701 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1240.36   15.12   +1.23    -25.93
  Spot Silver        18.82    0.36   +1.95    -37.85
  Spot Platinum    1321.49   19.99   +1.54    -13.91
  Spot Palladium    637.72    8.22   +1.31     -7.84
  COMEX GOLD AUG3  1240.00   10.20   +0.83    -26.01        38430
  COMEX SILVER JUL3  18.73    0.14   +0.74    -38.21
  Euro/Dollar       1.3029
  Dollar/Yen         97.95
 
  COMEX gold and silver contracts show the most active months
 
 (Editing by Muralikumar Anantharaman and Richard Pullin)
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