PRECIOUS-Gold rises on safety bids as S&P dips for 2nd weekly gain

Fri Aug 9, 2013 4:03pm EDT

* Oil rally and falling U.S. equities help gold turn higher
    * US wholesale inventory down, economists lower forecast
    * Bullion ends near key 55-day moving average resistance
    * Coming up: U.S. Federal Budget Monday

 (Adds technical analyst comment, updates market activity)
    By Frank Tang and Jan Harvey
    NEW YORK/LONDON, Aug 9 (Reuters) - Gold rose on Friday on an
oil rally and falling U.S. equities, with bullion notched a
second consecutive weekly gain due to uncertainty over when the
U.S. Federal Reserve will reduce its economic stimulus policy.
    Speculation the central bank could start tapering its $85
billion monthly bond purchases as soon as next month knocked
gold to a three-week low earlier this week. 
    But there was no consensus among Fed policymakers about the
exact timing on when to end the program. On Friday, government
data showed U.S. wholesale inventories unexpectedly fell for a
second straight month in June, prompting economists to trim
their growth estimates.  
    Gold reversed earlier losses as U.S. equities fell and were
set for their worst week since June. The S&P 500 index 
was off 0.3 percent. Investors found few reasons to buy with
equity prices near record levels. 
    "We are seeing some flight-of-safety bids in gold as the S&P
turns. That has a lot to do with the recognition that (the Fed's
quantitative easing) will continue as the economic numbers are
not supporting the reduction of QE," said Jeffrey Sica, chief
investment officer of Sica Wealth Management, which oversees
more than $1 billion in client assets.
    Oil prices gained amid supply disruptions in the Middle East
and signs of rising Chinese demand, increasing bullion's
inflation-hedge appeal. 
    Spot gold was up 0.3 percent at $1,314.91 an ounce
3:37 p.m. EDT (1937 GMT).
    For the week, gold is also up around 0.3 percent for its
fourth weekly gain in the past 5 weeks.
    On chart, gold ended just below a key resistance at its
55-day average around $1,319 an ounce.
    "Prices appear to be working on some type of bullish
reversal formation ... We think gold is set up to break above
resistance in the mid-$1,300 region, taking prices over $1,450,"
said Mark Arbeter, chief technical strategist at S&P Capital IQ.
    U.S. gold futures for December delivery settled up
$2.30 an ounce to $1,312.20, with trading volume at below
100,000 lots, preliminary Reuters data showed, more than halved
its 30-day average and on track to be its lowest turnover in
almost two months.
    As a gauge of investment demand, gold-backed exchange-traded
funds had more outflows, however. Holdings of the world's
largest gold ETF SPDR Gold Trust fell 1.2 tonnes on
Thursday. 
    Among other precious metals, silver rose 1.5 percent
to $20.51 an ounce, while platinum was up 0.8 percent at
$1,498.50 an ounce, and palladium added 0.6 percent to
$740.22 an ounce.
 3:37 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold DEC   1312.20   2.30   0.2  1304.10 1316.50   90,521
 US Silver SEP  20.407  0.214   1.1   20.045  20.580   47,697
 US Plat OCT   1500.60   9.00   0.6  1484.30 1505.30   10,841
 US Pall SEP    741.00   2.45   0.3   736.00  743.10    2,867
                                                               
 Gold          1314.91   3.52   0.3  1305.83 1316.50         
 Silver         20.510  0.310   1.5   20.120  20.560
 Platinum      1498.50  11.50   0.8  1485.00 1501.50
 Palladium      740.22   4.22   0.6   739.00  741.00
                                                               
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold         96,925   208,267   188,357     24.28    2.15
 US Silver       62,351    46,256    54,088     26.86   -0.54
 US Platinum     11,063    10,016    12,449     21.69    0.00
 US Palladium     3,782     3,728     5,344                  
                                                               
 
 (Additional reporting by A. Ananthalakshmi in Singapore;
Editing by Jeffrey Benkoe and Grant McCool)
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