PRECIOUS-Gold near 11-week high, physical demand quiet

Tue Aug 27, 2013 4:16am EDT

* Gold hits session high of $1,406.04 before easing
    * Traders cite profit-taking after recent jump in prices
    * Subdued physical demand in Asia -dealers

 (Updates prices)
    By A. Ananthalakshmi
    SINGAPORE, Aug 27 (Reuters) - Gold was trading near 11-week
highs on Tuesday on hopes of prolonged U.S. monetary stimulus
measures but traders said the rebound in prices was hurting
physical demand.
    Gold rose to $1,406.04, its highest since June 7, in early
Asian trading, supported by weak U.S. durable goods data. Some
profit taking kept prices below $1,400 for a while. 
    "It's quite risky to build on any fresh positions from here,
so people are just taking profits," said one Hong Kong-based
trader. 
    "Physical demand is very quiet at these levels and not
strong enough to support prices. If we cannot hold and stay
above $1,400 by the end of the week, it's a very bearish
situation for gold technically."
    Spot gold dropped 0.1 percent to $1,402.71 an ounce
by 0800 GMT, while silver slipped 0.6 percent.
    Gold has gained more than 6 percent this month and almost 19
percent from its year-low of $1,180.71 hit in late June. 
    Recent U.S. data on industrial production, new home sales
and durable goods orders have suggested economic growth this
quarter will probably not accelerate as much as economists had
hoped.
    Traders believe the weak data could deter the Federal
Reserve from tapering its stimulus, a process economists had
largely expected to start from next month. The Fed's
$85-billion-a-month bond purchases have helped drive increased
liquidity towards gold and other commodities.  
    
    PHYSICAL DEMAND WEAK
    Dealers said physical demand in Asia remained subdued due to
a seasonally weak summer period and the recent jump in prices.
    India is considering asking gold traders to provide proof of
payment for their jewellery exports, trade body officials said
on Monday, a move which may further tighten supplies in the
world's top bullion buyer. 
    Imports have come to standstill since July 22, when the
Indian central bank issued a rule tying imports to exports, in a
bid to reduce its trade deficit.
    Premiums of Shanghai gold futures to London prices
have fallen to about $18 an ounce from last week's levels above
$20.
        
  Precious metals prices 0800 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1402.71   -1.69   -0.12    -16.23
  Spot Silver        24.12   -0.15   -0.62    -20.34
  Spot Platinum    1539.88    0.03   +0.00      0.32
  Spot Palladium    743.50   -0.50   -0.07      7.44
  COMEX GOLD DEC3  1403.20   10.10   +0.73    -16.27        30277
  COMEX SILVER SEP3  24.15    0.14   +0.58    -20.31        12087
  Euro/Dollar       1.3377
  Dollar/Yen         97.83
 
  COMEX gold and silver contracts show the most active months
 
 (Editing by Clarence Fernandez)
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