PRECIOUS-Gold rises on U.S. dollar's fall, bargain hunting

Mon Jul 8, 2013 5:30pm EDT

* U.S. dollar reverses sharp gains after index hits 3-year
high
    * Paulson's gold fund posts fresh double-digit loss
    * Gold ETF holdings fall, signals weak investment demand
    * Coming up: U.S. wholesale data on Wednesday


    By Clara Denina 
    NEW YORK/LONDON, July 8 (Reuters) - Gold rose 1 percent on
Monday as a weaker U.S. dollar triggered bargain hunting after
the yellow metal's two-day slide caused by concerns the Federal
Reserve could soon start tapering its monetary stimulus.
    Investors are also digesting news that hedge fund manager
John Paulson's gold fund has lost 65 percent so far this year
after the portfolio declined 23 percent last month.
 
    Bullion has fallen 10 percent since Fed Chairman Ben
Bernanke last month said the economy was recovering strongly
enough for the U.S. central bank's $85 billion monthly
bond-buying stimulus to be reduced as soon as later this year.
    Data on Friday showed that U.S. employers added 195,000 new
jobs to their nonfarm payrolls last month, indicating that the
improvement in the jobs market remains on track. 
    "The move down (in gold) on Friday was pretty strong, so
obviously you would expect some kind of rebound and if you look
at currencies, the dollar is coming off earlier highs, so there
is a bit of stabilization in gold after losses," said Credit
Suisse analyst Karim Cherif.
    Spot gold rose 1 percent to $1,235.49 an ounce by
4:11 p.m. EDT (2011 GMT). 
    U.S. Comex gold futures for August settled up $22.20
at $1,234.90.
    Gold posted its biggest quarterly loss on record in the
second quarter, down 23 percent for April-June, and touched
$1,180.70 for the first time in nearly three years on June 28.
    On Monday, the U.S. dollar, which had initially rallied 1.5
percent to a three-year high against a basket of currencies,
reversed gains as investors booked profits on its rise.
 
    Investors were now focused on the Federal Open Market
Committee (FOMC) minutes, records from the Fed's June meeting,
due for release on Wednesday.
    
    FURTHER DECLINES SEEN POSSIBLE
    Analysts said continued liquidation from gold-backed
exchange-traded funds signal that interest in the precious metal
was waning. 
    Holdings of the world's largest gold-backed exchange-traded
fund, SPDR Gold Trust, fell 0.3 percent to 30.92 million
ounces on Friday, hitting fresh lows since February 2009.
 
    Among other precious metals, silver rose 0.8 percent
to $19.02 an ounce. Platinum gained 2.6 percent to
$1,357.49 an ounce and palladium was up 2.4 percent to
694.41 an ounce, as platinum group metals were helped by news of
renewed strike disruptions in major producer South Africa.
 
    
 1611 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold AUG   1,234.90 22.20   1.8  1,214.40 1,237.40  129,494
 US Silver SEP  19.038  0.302   1.6   18.670  19.265     28,316
 US Plat OCT   1,362.00 35.60   2.7  1,322.90 1,364.40    7,871
 US Pall SEP    695.40  17.85   2.6    673.30  703.10     2,814
                                                               
 Gold          1,235.49 12.18   1.0  1,216.38 1,238.30         
 Silver         19.020  0.160   0.8   18.740  19.290
 Platinum      1,357.49 33.99   2.6  1,326.00 1,361.50
 Palladium      694.41  16.41   2.4    676.00   700.25
                                                               
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        163,177   203,908   183,550     26.65   -0.41
 US Silver       30,868    66,366    56,197     37.34    1.90
 US Platinum      8,420    16,686    13,002     27.91   -0.41
 US Palladium     2,881     5,675     5,555