* Gold erases initialy gain on optimistic Fed assessment
* Silver up 3 pct as industrial metals, US equities rally
* Hopes of European resuce on Spain's banks help
* Top Fed official said may need further easing
* Coming up: U.S. weekly jobless claims Thursday
(Recasts, adds details, updates comment, market activity)
By Frank Tang
NEW YORK, June 6 Gold prices ended a shade
higher after a choppy session o n W ednesday, as an encouraging
assessment of the U.S. economy by the Federal Reserve wiped out
the safe-haven metal's early peak at a one-month high built on
speculation of more monetary easing from central banks.
The metal fell more than $20 an ounce or 1 percent from the
month-high earlier in the session after the Fed said in its
latest "Beige Book" summary of national activity that economic
growth picked up over the last two months and hiring showed
signs of a modest increase.
Silver outperformed gold and finished up 3 percent as U.S.
equities and industrial commodities rallied on better economic
sentiment on growing hopes of a European bailout for Spain's
Some investors lessened their bullish bets on gold after its
4.3 percent rally on Friday, when surprisingly weak U.S.
payrolls data reignited talk of another round of monetary easing
from the Federal Reserve. Traders said gold could further unwind
its gains if central banks do not commit to more stimulus.
"The Beige Book indicated that the economic condition was
better than what was priced in with the weak payrolls data, and
that removed some of the premium based on an imminent Fed
action," said Frank McGhee, head precious metals trader of
Integrated Brokerage Services LLC.
Spot gold was up 0.1 percent at $1,618.40 an ounce by
3:19 p.m. EDT (1919 GMT), after hitting a high of $1,640.50 an
ounce, which marked the strongest price since May 7.
On the charts, gold found support at its 50-day moving
average near $1,618 an ounce, and analysts said a bullish
double-bottom pattern also underpinned buying.
U.S. COMEX gold futures for August delivery settled
up $17.30 an ounce at $1,634.20, with trading volume set to be
the highest so far this week, preliminary Reuters data showed,
as trading desks in Britain returned from a two-day holiday.
The metal was also under pressure as investors digested news
that the European Central Bank put the onus firmly on euro zone
governments to solve the bloc's debt crisis, dashing
expectations it could take near-term action.
SILVER FOLLOWS BASE METALS, WALL ST
Silver performed better than gold because of its heavy use
as an industrial metal. Spot silver rose 2.8 percent to
$29.29 an ounce, having touched its highest since May 8 at
$29.94 an ounce, as it took the lead from copper and other base
Last Friday's dismal U.S. nonfarm payrolls data has
pressured the Fed to do more to help a slowing U.S. economy.
Atlanta Fed President Dennis Lockhart said on Wednesday that the
U.S. central bank may need to ease monetary policy further if a
wobbly U.S. economy falters or Europe's crisis triggers a
broader financial shock.
While some investors took profits after gold's near 4
percent rise last week, traders said gold could still outperform
the equities market on safe-haven bids due to a worsening of
Europe's debt crisis.
"While stocks may be nearing an attractive entry point,
precious metals may be rising on investors' shopping lists as
they start to look at deploying cash positions," said Jeff
Kleintop, chief market strategist of broker-dealer LPL
On platinum group metals, spot platinum was up 1.8
percent at $1,454.80 an ounce, while spot palladium edged
up 0.4 percent at $622.03 an ounce.
3:19 PM EDT LAST/ NET PCT LOW HIGH CURRENT
SETTLE CHNG CHNG VOL
US Gold AUG 1634.20 17.30 1.1 1614.40 1642.40 165,281
US Silver JUL 29.488 1.083 3.8 28.410 29.865 59,134
US Plat JUL 1469.20 28.70 2.0 1433.80 1470.40 10,008
US Pall SEP 632.80 13.00 2.1 620.35 633.80 3,332
Gold 1618.40 1.15 0.1 1614.36 1640.50
Silver 29.290 0.790 2.8 28.500 29.880
Platinum 1454.80 25.55 1.8 1438.00 1466.74
Palladium 622.03 2.53 0.4 623.25 629.75
TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG
US Gold 173,969 209,892 195,756 24.06 -0.58
US Silver 72,948 51,077 52,906 33.43 -3.10
US Platinum 11,235 7,975 7,961 18 0.00
US Palladium 3,375 5,843 4,573
(Additional reporting by Jan Harvey in London; Editing by David
Gregorio and Marguerita Choy)