PRECIOUS-Gold eases on stimulus worries, but sentiment improving

Wed Aug 21, 2013 3:12am EDT

* Gold fluctuates between losses and gains
    * More funds keen on gold exposure; ANZ lifts forecast
    * Coming up: Minutes of Fed meeting at 1800 GMT

 (Updates prices)
    By A. Ananthalakshmi
    SINGAPORE, Aug 21 (Reuters) - Gold slipped on Wednesday on
uncertainty over whether the U.S. Federal Reserve would begin
curbing its commodities-friendly economic stimulus from next
month.
    Investor sentiment towards the precious metal, however,
seems to be more positive now than earlier this year as many
believe the worst is over and have begun injecting money again
into gold-backed funds. 
    Bullion has lost nearly a fifth of its value this year on
stimulus worries and outflows from exchange traded funds (ETFs).
It fell to a three-year low of $1,180.71 an ounce in June but
has since recovered about $200.
    Spot gold fell 0.2 percent to $1,367.35 by 0701 GMT,
but was still near two-month highs.
    "Our clients are tempted to add more exposure to gold," said
Helen Lau, senior analyst for China's commodities sector at
UOB-Kay Hian. "It's because of the recent gold price increase,
U.S. dollar weakness and strong consumer demand in China."
    "Certainly they are not bearish on gold any more. We now
think the downside pressure (on gold prices) is very limited."
    Several brokerages, including Goldman Sachs, have cut their
price outlook for gold since the beginning of the year. But ANZ
on Tuesday was one of the first to lift its forecast.
    "We have revised our precious metal forecasts higher
near-term as the rebound since the end of June has occurred
earlier than we originally anticipated," ANZ analysts wrote.
They raised their year-end price forecast to $1,380 from their
earlier view of $1,300. 
    "The bounce in gold prices appears to be more sustainable -
coinciding with a reversal of ETF outflows. We also see little
downside to physical demand, with China continuing to buy
strongly," the analysts wrote.
    Demand from China and India is expected to hit 1,000 tonnes
each this year, according to the World Gold Council.
 
    SPDR Gold Trust, the world's largest gold-backed ETF,
has seen about 400 tonnes in outflows so far this year. However,
it has seen some inflows over the last two weeks. 

    FED UNCERTAINTY
    Markets are waiting for the release on Wednesday of minutes
from the Fed's July policy meeting for clues on the timing of
stimulus tapering. 
    The U.S. central bank has said that it would begin scaling
back its $85 billion in monthly bond purchases this year if the
economy recovers as expected. But Fed officials are not in
consensus on whether they should cut back from September as
expected by the markets. 
   
  Precious metals prices 0701 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1367.35   -3.32   -0.24    -18.34
  Spot Silver        22.91   -0.08   -0.35    -24.34
  Spot Platinum    1514.24    1.64   +0.11     -1.35
  Spot Palladium    745.47   -1.53   -0.20      7.73
  COMEX GOLD DEC3  1367.10   -5.50   -0.40    -18.42        20189
  COMEX SILVER SEP3  22.92   -0.16   -0.68    -24.39        10125
  Euro/Dollar       1.3408
  Dollar/Yen         97.49
 
  COMEX gold and silver contracts show the most active months
 
 
 (Editing by Muralikumar Anantharaman and Richard Pullin)
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