PRECIOUS-Gold posts 3 percent weekly gain, Fed comment eyed

Fri Jul 26, 2013 4:25pm EDT

* Profit taking seen, after over 8 percent gain in three
weeks
    * Gold notches first 3-week rise since March
    * Russia ups gold reserves in June, others cut -IMF data
    * Coming up: U.S. pending home sales Monday

 (Recasts, adds market details, updates prices)
    By Frank Tang and Veronica Brown
    NEW YORK/LONDON, July 26 (Reuters) - Gold was flat on Friday
after a late rally erased initial losses and bullion ended the
week nearly 3 percent higher as wariness over the U.S. Federal
Reserve's message at next week's monetary policy meeting pushed
the dollar down.
    Bullion's third consecutive weekly rise marked its longest
weekly winning streak since March, prior to the two-day $225
selloff in mid April. 
    A rally to climb back over a key technical threshold at
$1,300 an ounce earlier in the week prompted speculators fearing
a reversal of the recent downward price trend to rush to buy
back bearish bets.
    On Friday, sharp losses in industrial metals across the
board more than offset the dollar's fall to a five-week low,
which was driven by speculation the Federal Open Market
Committee (FOMC) will emphasize next week its intention to keep
interest rates low for longer.  
    "It is understandable that money managers be wary of any
slight change in verbiage from the Fed in these low
interest-rate days," said Carlos Perez-Santalla at brokerage
Marex Spectron. 
    Spot gold fell 0.2 percent to $1,330.30 per ounce by
3:46 p.m. EDT (1946 GMT).
    Traders said some profit-taking was seen as buyers cashed in
from gold's Friday session high of $1,340, about $160 higher
than the three-year low hit June 28. 
    U.S. Comex gold futures for August delivery settled
down $7.30 at $1,321.50 an ounce, with trading volume about 15
percent higher, preliminary Reuters data showed. 
    Bullion has gained more than 9 percent in three weeks after
the Federal Reserve in late June assured financial markets it
would only start phasing out its monetary stimulus when it was
sure the U.S. economy was strong enough to stand on its own.
    Bullion has lost a fifth of its value this year as investors
feared recovery in the United States might prompt the Fed to
scale back its $85 billion monthly bond purchases. Outflows from
gold exchange-traded funds (ETFs) have also weighed.
    
    PHYSICAL DEMAND IN SHARP FOCUS
    Investors now digest news that JPMorgan Chase & Co 
said it was considering a sale or a spin-off of its physical
commodities business, including its holdings of commodities
assets and its physical trading operations, as regulators
increase scrutiny of Wall Street's role in commodities.
    The U.S. bank said it will remain fully committed to its
traditional banking activities in the commodity markets,
including financial derivatives and the vaulting and trading of
precious metals. 
    Separately, latest data showed a mixed bag of central-bank
gold activities.
    Russia, Ukraine and Azerbaijan were among eight countries
that increased their gold holdings in June, data from the
International Monetary Fund showed, while Turkey, Germany and
seven other countries shed some of their bullion.
 
    Among other precious metals, silver fell 1.2 percent
to $19.95 per ounce, platinum was down 1.5 percent at
$1,424.49 while palladium slipped 2 percent to $721.97.
 3:46 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold AUG   1321.50  -7.30  -0.5  1311.90 1340.50  158,550
 US Silver SEP  19.771 -0.383  -1.9   19.625  20.355   39,129
 US Plat OCT   1422.80 -25.10  -1.7  1411.50 1451.60    9,413
 US Pall SEP    724.00 -16.75  -2.3   714.10  742.50    4,304
                                                               
 Gold          1330.30  -2.74  -0.2  1312.98 1340.21         
 Silver         19.950 -0.250  -1.2   19.700  20.320
 Platinum      1424.49 -21.51  -1.5  1414.25 1449.00
 Palladium      721.97 -15.03  -2.0   718.27  741.00
                                                               
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        231,041   209,649   180,899     22.38    0.55
 US Silver       41,767    60,267    56,437     29.17   -0.73
 US Platinum      9,508    14,361    13,107     23.87    0.01
 US Palladium     4,446     4,381     5,480                  
                                                               
   

 (Additional reporting by A. Ananthalakshmi in Singapore;
Editing by Jeff Coelho, James Jukwey, Chris Reese and Andrew
Hay)
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