PRECIOUS-Gold jumps to 1-month high on technical buying

Mon Jul 22, 2013 3:06am EDT

* Breaks above key technical level of $1,300
    * To test $1,331 resistance-technicals 
    * Coming up: U.S. Existing home sales; 1400 GMT

 (Updates prices)
    By Lewa Pardomuan
    SINGAPORE, July 22 (Reuters) - Gold gained 1.7 percent to a
one-month high on Monday on technical buying after the U.S.
dollar slipped, but the precious metal is still down more than a
fifth this year.
    Bullion's appeal as a hedge against inflation has been
dented by expectations the U.S. Federal Reserve will eventually
pare back its bond-purchase programme. The Fed's three
quantitative easing schemes have boosted gold and other
commodities. 
    Gold climbed to as much as $1,322.50 an ounce, its
highest since June 20, and stood at $1,317.74 by 0617 GMT. The
metal is more than $600 below a lifetime high of $1,920.30
struck in 2011.
    "It broke through a key technical level, which is $1,300.
That level has been tested a few times in the last one-and-half
weeks. It's a lot of technical buying and high-frequency
trading," said Joyce Liu, an investment analyst at Phillip
Futures in Singapore.
    "I don't think fundamentals have changed. I think gold
prices are still more prone to the downside. Ben Bernanke's
speech last week seems to show the market should be prepared for
a reduction in bond buying," said Liu, referring to the Fed
chairman. 
    Although cash gold still gained support from bullion futures
on the Tokyo Commodity Exchange, outflows from the SPDR Gold
Trust, the world's largest gold-backed exchange-traded
fund, were likely to cap gains. 
    The most active June 2014 gold contract on TOCOM 
rose as high as 4,258 yen a gram, its highest since June 17,
because of an initial drop in the yen and the Nikkei's gains. 
    
    U.S. gold rose 1.91 percent to $1,317.60 an ounce.  
   
    The euro edged up, but the yen briefly slipped after
Prime Minister Shinzo Abe was given a solid platform to continue
his aggressive push to reflate the world's third-biggest
economy. The dollar index was down 0.1 percent.
  
    Physical buyers were mostly absent on Monday, but dealers in
Hong Kong said supply of gold bars and coins had tightened after
a drop in prices to a near three-year low of around $1,180 in
late June ignited buying.  
    "We heard some gold refiners in Switzerland will close in
August for the summer holidays. They have stopped taking orders.
There's technical buying. Maybe we are looking for the price to
go up to $1,325," said a dealer in Hong Kong.
    "Gold prices in Shanghai are still at premiums, so it also
suggests there's a little buying there."          
    Gold prices in Shanghai were around $22 higher
than cash gold.
    In other precious metals, silver tracked gold higher,
platinum rose to its highest since June 19 and palladium
 jumped to its strongest in nearly six weeks. 
    Hedge funds and money managers raised their bullish bets in
gold and silver futures and options in the week to July 16,
while they trimmed net shorts in copper, a report by the
Commodity Futures Trading Commission showed on Friday.
 
        
  Precious metals prices 0617 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1317.74   22.00   +1.70    -21.31
  Spot Silver        19.94    0.48   +2.47    -34.15
  Spot Platinum    1434.75   11.25   +0.79     -6.53
  Spot Palladium    748.00    3.50   +0.47      8.09
  COMEX GOLD AUG3  1317.60   24.70   +1.91    -21.37        39425
  COMEX SILVER SEP3  0.20    0.00   +2.49    -99.34         8575
  Euro/Dollar       1.3148
  Dollar/Yen        100.07
 
  COMEX gold and silver contracts show the most active months
 
 (Editing by Muralikumar Anantharaman)
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