PRECIOUS-Gold rises from 4-month low on options-related buying

Mon Nov 25, 2013 4:10pm EST

* Bullion reverses losses after brief futures trading pause
    * Gold investors shrug off U.S. economic data
    * SPDR posts biggest outflow in 3 weeks
    * Coming up: US housing starts, consumer confidence Tuesday

 (Adds trader comment, updates market activity)
    By Frank Tang and Clara Denina 
    NEW YORK/LONDON, Nov 25 (Reuters) - Gold prices rose on
Monday, reversing early losses in a late-session rally, as
options-related demand and short-covering offset a weaker crude
oil market following a deal on Iran's nuclear program.
    Buying related to Monday's Comex December option expiration
and the December-February contract rollover underpinned gold
prices, said George Gero, vice president of RBC Capital Markets.
    Spot gold was up 0.5 percent at $1,249.64 by 3:32
p.m. EST (2032 GMT), having earlier fallen to its lowest level
since July 8 at $1,227.34 an ounce.
    Early in the day, bullion prices fell 1 percent to a
four-month low after a weekend agreement that halts Iran's most
sensitive nuclear activity. The deal suspends some sanctions by
the United States and the European Union on several sectors of
Iran's economy for an initial six-month period. 
    U.S. Comex gold futures trading was halted for 20 seconds at
1:02 a.m. by CME Group's Stop Logic mechanism to prevent
excessive price movements. In the 10 minutes around the trading
pause, gold prices slid more than $11 on a higher-than-average
volume of 5,400 lots.
    Gold futures for December delivery settled up $2.90
at $1,241.20 an ounce.
    Trading volume was 60 percent above its 30-day average,
largely boosted by the December-February contract rollover ahead
of the December contract's first-notice day on Friday,
preliminary Reuters data showed.
    Mixed U.S. economic reports had little effect on gold
prices. Data showed contracts to buy previously owned U.S. homes
hit a 10-month low in October, but a strong rebound in services
sector activity early this month suggested some resilience in
the economy. 
    "The problem for gold investors is that the horizon now is
so flat in terms of that negative shock from either inflation or
deflation," said Andrew Wilkinson, chief economic strategist at
Miller Tabak & Co. "There is just a lack of rationale to stay
invested in gold."
    A partial recovery in the crude oil market, which had fallen
3 percent earlier in the session, lifted the market off its
lows, traders said. Brent crude futures ended down 0.1
percent. 
    Gold is usually seen as a hedge against oil-led inflation. 

    ETF OUTFLOWS, TAPER FEARS WEIGH
    Bullion was still weighed down by fears of an early end to
U.S. stimulus measures and by the biggest drop in three weeks in
the holdings of the largest bullion-backed exchange-traded fund.
    Holdings in SPDR Gold Trust, the world's largest
gold-backed exchange-traded fund and the best measure of
investor sentiment, fell 4.50 tonnes to 852.21 tonnes on Friday,
the lowest since February 2009. That was the sharpest drop since
Nov. 1. 
    Silver was up 0.7 percent at $20 an ounce, having
touched its lowest since mid-August at $19.54 earlier.
    Platinum edged up 0.2 percent to $1,380.99 an ounce,
while palladium rose 0.6 percent to $718.47 an ounce.
 3:32 PM EST     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold DEC   1241.20  -2.90  -0.2  1225.70 1254.00  177,436
 US Silver DEC  19.882  0.020   0.1   19.570  20.100   55,282
 US Plat JAN   1377.80  -4.90  -0.4  1374.20 1389.50    9,190
 US Pall DEC    719.90   5.85   0.8   708.95  725.05    5,120
                                                              
 Gold          1249.64   6.65   0.5  1228.38 1252.50         
 Silver         20.000  0.140   0.7   19.540  20.070
 Platinum      1380.99   3.19   0.2  1377.25 1388.00
 Palladium      718.47   6.11   0.9   712.52  720.97
                                                              
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        242,830   153,898   158,890     19.99    0.12
 US Silver       84,326    51,410    54,387     24.99   -1.28
 US Platinum      9,379     9,465    12,987     16.55   -1.43
 US Palladium     9,004     7,538     5,829     19.76   -2.64
                                                              
   

 (Additional reporting by A. Ananthalakshmi in Singapore;
editing by Jane Baird, Anthony Barker, David Evans, David
Gregorio and Peter Galloway)
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