PRECIOUS-Gold races above $1,300, posts biggest weekly gain in 6 months

Fri Feb 14, 2014 2:38pm EST

* Gold rises with Wall St despite weak US economic data
    * Break above 200-day moving average triggers buying
    * Gold ETF reports inflow, investment sentiment rises
    * Coming up: US New York State manufacturing index Tues

 (Adds comment, second byline, dateline, updates market
activities)
    By Frank Tang and Clara Denina 
    NEW YORK/LONDON, Feb 14 (Reuters) - Gold rose to a
three-month high above $1,300 an ounce on Friday, gaining 1
percent and notching its biggest weekly gain in six months, as
weak U.S. manufacturing output pressured the dollar and lifted
bullion's currency-hedge appeal.
    A technical break-out above tough resistance at its 200-day
moving average, and signs of recovering investment demand in
gold exchange-traded funds, also triggered gold buying, traders
said.
    Bullion reversed its recent strong inverse link with
equities, which had been pressured by economic uncertainties and
emerging-market jitters. 
    On Friday, U.S. equities, measured by the S&P 500 index
, rose 0.5 percent as investors were willing to add
riskier investments by overlooking some soft economic data
stemming from bad weather. 
    "Risk-on is typically deemed bad for precious metals prices,
but the downdraft for the dollar and the steady-as-she-goes Fed
policy threatening slow retreat from an ultra-easy stance, is
boosting demand for gold," said Andrew Wilkinson, chief market
analyst at Interactive Brokers LLC.
    Spot gold was up 1.2 percent at $1,317.90 an ounce by
2:06 p.m. EST (1906 GMT), after rising to its highest since Nov.
7 at $1,320.90. It was up around 4 percent for the week, the
largest such gain since mid-August.
    U.S. gold futures for April delivery settled up
$18.50 at $1,318.60 an ounce, up for an eighth straight session
in the longest winning streak since July 2011. 
    Trading volume was about 10 percent below its 30-day moving
average, preliminary Reuters data showed.
    The technical picture has improved over the past few
sessions and a move above its 200-day moving average, last seen
in August 2012, analysts said.
    However, some traders noted that the 14-day relative
strength index (RSI) for spot gold jumped to about 74. A reading
above 70 is considered to be in overbought territory.
    Gold has gained nearly 9 percent since the beginning of the
year, after a 28 percent drop in 2013, on doubts over the U.S.
economic recovery and as emerging-market turmoil weighed on some
equity markets. 
    Analysts remain cautious over the medium-term outlook for
gold, however. Many expect the U.S. economy to recover and the
dollar to rally, making the investment case for gold, usually
seen as a safe haven in times of trouble, still unattractive.
    Investor sentiment seems to have improved, with SPDR Gold
Trust, the world's largest gold-backed exchange-traded
fund, posting its biggest inflow since late December, up 7.5
tonnes to 806.35 tonnes on Thursday. 
    Silver climbed to its highest since November at
$21.42 an ounce earlier and posted its second straight weekly
gain. It was up 4.3 percent for the day at $21.32. 
    Platinum gained 0.8 percent to $1,423.50 an ounce,
while palladium climbed 0.6 percent to $733.25 an ounce.
                SETTLE   CHNG  CHNG                       VOL
 US Gold APR   1318.60  18.50   1.4  1299.90 1321.50  134,486
 US Silver MAR  21.421  1.026   5.0   20.445  21.440   66,629
 US Plat APR   1430.10  13.50   1.0  1412.10 1431.50    9,842
 US Pall MAR    737.60   6.50   0.9   730.00  740.45    5,375
                                                              
 Gold          1317.90  15.60   1.2  1300.35 1320.90         
 Silver         21.320  0.870   4.3   20.480  21.420
 Platinum      1423.50  11.75   0.8  1415.25 1429.50
 Palladium      733.25   4.35   0.6   733.30  739.50
                                                              
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        141,723   172,213   186,052     18.69    0.23
 US Silver       82,528    43,600    56,067     26.53    0.36
 US Platinum     10,046    10,646    13,326     17.78   -0.15
 US Palladium     6,973     4,042     5,542     19.08    0.56
                                                              
 

 (Additional reporting by A. Ananthalakshmi in Singapore;
Editing by Nick Zieminski; Editing by David Evans and Dale
Hudson)