PRECIOUS-Gold rebounds on bargain hunting after two-day tumble

Wed Jul 16, 2014 3:00pm EDT

* Gold rises after biggest two-day loss since October
    * Bullion finds support near 50-day moving average
    * Gold fix moved to electronic platform possible
    * Coming up: U.S. housing starts, jobless claims Thursday

 (Adds NEW YORK to dateline, second byline, updates market
activities)
    By Frank Tang and Clara Denina 
    NEW YORK/LONDON, July 16 (Reuters) - Gold rebounded on
Wednesday after two consecutive days of sharp losses, but a
strong U.S. economic outlook and fears that the Federal Reserve
could raise U.S. interest rates limited gains for the safe
haven.
    Traders said that bottom-picking after the metal's biggest
two-day drop since October underpinned prices. Bullion was also
boosted by technical buying after it found support at its 50-day
moving average near $1,290 an ounce for a second straight day.
    "We are seeing some bargain hunting after the losses of the
past two days," MKS SA head of trading Afshin Nabavi said.    
    Gold's rally faded after data showed U.S. manufacturing
output rose at its fastest pace in more than two years in the
second quarter, suggesting the economy was regaining enough
momentum to lift growth throughout the year. 
    Spot gold rose 0.2 percent to $1,296.94 an ounce by
2:16 p.m. EDT (1816 GMT), after losing 3.3 percent in the last
two sessions, its biggest two-day loss since Oct 1. 
    U.S. gold futures for August delivery settled up
$2.70 at $1,299.80 an ounce, with trading volume about 20
percent below its 30-day average, preliminary Reuters data
showed.
    The metal broke below $1,300 for the first time since June
19 on Tuesday after a Fed report showed its balance sheet would
top out at $4.5 trillion when its bond-buying program ends in
October - a timeline consistent with what Fed policymakers had
said previously..
    Gold's gains also fizzled after Dallas Fed President Richard
Fisher said on Wednesday the central bank is "likely" to start
raising interest rates gradually early next year and should
begin shrinking its massive balance sheet in October to signal
its confidence in the recovery. 
    Market participants now digested news after the London Gold
Market Fixing Ltd said it is seeking a third party to take over
the administration of a century-old global price benchmark known
as the "fix," possibly signalling a move to an electronic
platform. 
    Among other precious metals, platinum was up 0.2
percent at $1,478.50 an ounce, while palladium rose 1
percent to $871.83 an ounce and silver gained 0.1 percent
to $20.67 an ounce.
    
2:16 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
               SETTLE   CHNG  CHNG                       VOL
US Gold AUG   1299.80   2.70   0.2  1293.50 1304.20  100,119
US Silver SEP  20.775 -0.114  -0.5   20.630  20.880   32,652
US Plat OCT   1485.70   0.70   0.0  1481.00 1492.10    6,235
US Pall SEP    876.75   8.20   0.9   867.00  877.20    3,386
Gold          1296.94   2.84   0.2  1293.60 1303.90         
Silver         20.670  0.020   0.1   20.600  20.810
Platinum      1478.50   2.25   0.2  1479.30 1486.50
Palladium      871.83   8.83   1.0   867.50  875.10
TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
               CURRENT   30D AVG  250D AVG   CURRENT     CHG
US Gold        120,930   150,992   166,329     13.86    0.02
US Silver       34,220    65,786    54,770     18.99   -0.23
US Platinum      6,420    15,019    12,268     16.75   -0.44
US Palladium     3,722     4,461     5,842      21.6    0.58

 (Additional reporting by A. Ananthalakshmi in Singapore;
Editing by David Evans and Marguerita Choy)
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