PRECIOUS-Gold rises on dollar drop, snaps seven-day decline

Wed Nov 6, 2013 2:14pm EST

Related Topics

* Gold ends up, breaks seven-session consecutive drop
    * Analysts speculate whether Fed may trim stimulus soon
    * Physical demand soft, Indian premiums halve
    * Coming up: U.S. weekly jobless claims Thursday

 (Updates market activity)
    By Frank Tang and Clara Denina 
    NEW YORK/LONDON, Nov 6 (Reuters) - Gold rose on Wednesday,
halting its longest losing streak in nearly six months, boosted
by a dollar drop and expectations that the U.S. Federal Reserve
will extend its monetary stimulus.
    Trading volume continued to be weaker than usual, a sign
that the record-high equities market has weighed down on bullion
investor interest. The S&P 500 equities index was up 0.3
percent. 
    Earlier this week, one senior Federal Reserve official said
the U.S. central bank should scale back its asset purchases only
when the economy shows clearer signs of improvement and even
then it should act slowly, while two others stressed there is no
need to rush. 
    However, Friday's strong U.S. manufacturing activity report
left some market watchers to speculate that the Fed could taper
its bond-buying stimulus before year-end.
    "We expect U.S. economic data to continue to have an
outsized impact on gold for the near term," said James Steel,
HSBC chief metals analyst. "Given the recent string of
better-than-expected U.S. economic data, gold may test the
$1,300 an ounce level ahead of the payrolls report."
    Spot gold was up 0.5 percent at $1,317.24 an ounce by
1:53 p.m. EST (1853 GMT). The metal had dropped 3 percent over
the past seven sessions, which matched the longest losing streak
set in early May.
    U.S. Comex gold futures for December settled up $9.70
at $1,317.80 an ounce, with trading volume on track to finish
about 50 percent below its 250-day average, preliminary Reuters
data showed.
    Futures turnover has been low over the past few sessions,
and investors are expected to remain cautious ahead of U.S.
non-farm payrolls data on Friday, which could give more clues on
the state of the economy and the future of the Fed's stimulus.
    "The relative weakening of the dollar is giving some support
today but ... if the non-farm payrolls come in better than
expected on Friday, then we could see gold lose that support,"
Mitsubishi analyst Jonathan Butler said.
    The dollar fell against the euro on stronger-than-expected
German economic data and as investors waited to find out what
steps the European Central Bank (ECB) might signal at its policy
meeting on Thursday. 

    SLOW PHYSICAL DEMAND 
    Demand for physical gold has failed to pick up robustly as
traders await clearer price direction.
    Gold premiums in India halved on Tuesday from levels last
week because of unusually muted demand during the festival
season and as supply was set to improve after some importing
agencies began purchasing for domestic use. 
    Among other precious metals, silver rose 0.6 percent
to $21.79 an ounce, platinum gained 0.9 percent to
$1,460.99 an ounce, while palladium rose 1.8 percent to
$759.97, having earlier climbed to its highest level since
mid-August at $761.75. 
    
 1:53 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold DEC   1317.80   9.70   0.7  1308.90 1322.00   87,317
 US Silver DEC  21.768  0.132   0.6   21.620  22.075   30,190
 US Plat JAN   1467.40  17.40   1.2  1450.00 1469.90    6,259
 US Pall DEC    764.35  14.05   1.9   749.50  764.95    5,668
                                                               
 Gold          1317.24   6.25   0.5  1309.68 1321.70         
 Silver         21.790  0.140   0.6   21.650  22.040
 Platinum      1460.99  13.25   0.9  1452.50 1467.00
 Palladium      759.97  13.50   1.8   751.50  761.75
                                                               
 TOTAL MARKET               VOLUME          30-D ATM VOLATILITY
                CURRENT    250D AVG   CURRENT     CHG
 US Gold        101,311     189,283     19.79   -0.22
 US Silver       36,647      58,610     27.83   -0.34
 US Platinum      6,397      12,978     18.17   -0.05
 US Palladium     6,313       5,806                  
                                                               
   

 (Additional reporting by A. Ananthalakshmi in Singapore;
editing by Jane Baird, Keiron Henderson, Phil Berlowitz and
Marguerita Choy)
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