PRECIOUS-Gold near 3-week high on U.S. data, fund inflows

Thu Aug 15, 2013 3:37am EDT

* Gold up for sixth session out of seven to 3-week high
    * Silver, other precious metals at multi-week highs
    * SPDR Gold fund sees rare inflows

 (Updates prices)
    By A. Ananthalakshmi
    SINGAPORE, Aug 15 (Reuters) - Gold extended gains on
Thursday to a three-week high on hopes the Federal Reserve may
not scale back its commodities-friendly bond buying soon, and as
holdings at the world's top gold-backed exchange traded fund
(ETFs) rose for a second time in a week.
    Traders shrugged off tighter import rules in India and
outflows from other gold ETFs, pushing up prices for a sixth
session out of seven on the prospect of rising demand from
investors and physical buyers. 
    Outflows from the eight biggest gold ETFs tracked by Reuters
have totalled nearly 20 million ounces, or $27 billion, so far
this year. Rare inflows tend to boost market sentiment. 
    "What is important is that the outflows have slowed," said
Han Pin Hsi, global head of commodities research at Standard
Chartered Bank in Singapore.
    "We are seeing signs that there is a little bit of
confidence coming into the market. And we could be close to the
bottom in terms of the ETF outflows," he added.
    Spot gold gained 0.3 percent to $1,337.69 an ounce by
0714 GMT. It hit $1,345.07 earlier - its highest since July 24. 
    U.S. producer prices were flat in July, which could add to
worries at the Federal Reserve that inflation is running too
low, indicating the U.S. central bank might not end its stimulus
until inflation begins to trend higher. 
    The Fed risks pushing inflation even lower if it tapers bond
purchases too aggressively, a senior central banker said on
Wednesday. 
    Holdings of SPDR Gold Trust rose for the first time
since June 10 last Friday and had remained unchanged before
rising 0.23 percent to 913.23 tonnes on Wednesday, raising hopes
that the worst of outflows from the fund is over. 
    Quarterly reports from top U.S. hedge funds showed that many
had reduced, and in some cases completely exited, their stakes
in SPDR amid a sharp drop in prices this year. Longtime bull
John Paulson halved his stake in SPDR. 
    Physical demand, however, seemed to be picking up with the
recent stabilization in prices bringing back buyers.
    Demand in India and China could each cross 1,000 tonnes this
year, the World Gold Council said on Thursday. It also said
overall gold demand fell 12 percent in the second quarter due to
the outflows from ETFs.  
    Silver rose more than 1 percent to its highest in a
month as holdings in the world's largest silver-backed
exchange-traded fund, iShares Silver Trust, rose to a
four-month high. 
    Platinum rose to its highest in more than two months,
while palladium hit its highest since late July.

  Precious metals prices 0714 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1337.69    3.10   +0.23    -20.12
  Spot Silver        21.96    0.14   +0.64    -27.48
  Spot Platinum    1506.74    9.94   +0.66     -1.84
  Spot Palladium    742.00    5.00   +0.68      7.23
  COMEX GOLD DEC3  1337.50    4.10   +0.31    -20.19        29915
  COMEX SILVER SEP3  21.96    0.17   +0.77    -27.56        13150
  Euro/Dollar       1.3285
  Dollar/Yen         97.83
 
  COMEX gold and silver contracts show the most active months
 
 (Editing by Muralikumar Anantharaman and Ed Davies)