* Gains in US equities lift gold after CPI data
* Technical support underpins as bullion held above 50 DMA
* Largest gold, silver ETFs report outflows
* Coming up: U.S. housing starts Wednesday
(Updates prices, adds trader caution ahead of debate)
By Frank Tang
NEW YORK, Oct 16 Gold rose on Tuesday to snap
two days of hefty losses lifted by a broad dollar drop and by
data showing U.S. consumer prices climbed but not enough to
derail the Federal Reserve's ultra-easy monetary policy.
The metal rebounded from Monday's one-month low, after U.S.
Labor Department said U.S. Consumer Price Index climbed 0.6
percent in September, matching analysts' expectations and
August's reading. Solid gains in U.S. equities also
Gold has rallied $200 an ounce in the last two months due to
hopes that the Fed's monetary stimulus might trigger inflation.
The U.S. central bank said in September it would keep buying
mortgage-backed securities until the job market improves
"From an inflation standpoint, the fact that the CPI is in
line gives the Fed more room to continue easing," said Adam
Sarhan, CEO of Sarhan Capital.
Technical buying also boosted gold as it held well above key
support of its 50-day moving average (DMA) despite Monday's
pullback. Late last month, the metal formed a bullish "golden
cross," in which its 50 DMA traded above its 200 DMA.
As long as gold held above its 50 DMA, it stood ready to
challenge its next major resistance at $1,800 an ounce, Sarhan
Spot gold was up 0.5 percent at $1,744.60 an ounce by
2:05 PM EDT (1805 GMT), well above the previous day's one-month
low at $1,728.75. The metal had dropped almost 2 percent in the
last two sessions.
U.S. COMEX gold futures for December delivery settled
up $8.70 an ounce at $1,746.30, with trading volume at about 45
percent below its 30-day average, preliminary Reuters data
Some analysts said some gold investors stayed on the
sidelines due to political uncertainty ahead of a second U.S.
A U.S. "fiscal cliff" of automatic spending cuts and tax
increases scheduled for January also triggered some safe-haven
bids, traders said. That scenario could shock the economy and
lead to more money printing from the Fed.
ETF HOLDINGS EASE
Investors appeared to lessen their bullish bets on gold
after Monday's decline. Holdings of bullion exchange-traded
funds tracked by Reuters fell on Monday, due to
an outflow from the largest gold ETF the SPDR Gold Trust.
The largest silver ETF, the iShares Silver Trust also
recorded an outflow of about 0.3 million ounces on Monday.
Other precious metals also rebounded after Monday's sharp
pullback. Silver was up 0.6 percent at $32.87 an ounce.
On Monday it hit a one-month low at $32.53 an ounce.
Platinum group metals climbed, even though analysts said
sentiment remained cautious after Chinese-owned car maker Volvo
said it would halt production for a week this month due to
continued low demand, especially in Europe.
Spot platinum edged up 0.1 percent at $1,636.74 an
ounce, while spot palladium was up 0.9 percent at $635.47
2:05 PM EDT LAST/ NET PCT LOW HIGH CURRENT
SETTLE CHNG CHNG VOL
US Gold DEC 1746.30 8.70 0.5 1736.10 1748.90 91,883
US Silver DEC 32.959 0.216 0.7 32.655 33.080 25,677
US Plat JAN 1645.20 12.90 0.8 1635.00 1652.70 5,140
US Pall DEC 638.95 6.35 1.0 631.50 642.40 1,683
Gold 1744.60 9.11 0.5 1735.40 1747.20
Silver 32.870 0.180 0.6 32.650 33.020
Platinum 1636.74 1.48 0.1 1635.75 1645.24
Palladium 635.47 5.87 0.9 634.27 640.00
TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG
US Gold 95,535 170,257 174,265 16 0.07
US Silver 26,901 51,596 56,765 35 7.00
US Platinum 5,250 15,849 9,750 21.23 0.64
US Palladium 1,793 4,264 4,816
(Additional reporting by Jan Harvey in London; Editing by
Marguerita Choy and Bob Burgdorfer)