* Italian debt auction, Cyprus' capital control weigh
* Two top Fed officials: Bond purchases to last through 2013
* Inverse correlation between gold, S&P strongest in 9 mths
* Coming up: US real GDP, initial jobless claims Thursday
(New throughout, adds graphic link, changes byline, dateline,
By Frank Tang
NEW YORK, March 27 Gold rose 0.5 percent on
Wednesday, snapping a three-day losing streak, as renewed euro
zone worries and hopes the Federal Reserve will continue its
loose monetary policy triggered bullion buying.
The metal reversed earlier losses, as U.S. equities slipped
after soft demand at an Italian debt auction stirred fears about
the financial stability of the euro zone.
Also underpinning gold was a plan by Cyprus to restrict
capital flow as it tries to avert a run on its banks after
agreeing a tough rescue package with international lenders.
Gold, however, was on track to rise around 1.7 percent in
March on resurgent safe-haven bids and hopes of a prolonged Fed
stimulus. It will mark the metal's first monthly gain after it
had posted losses in the last five months.
"While March seems to have been a month for moderation of
economic activity, our view remains one of improving global
growth. We believe these recent trends are likely to reverse,
leading to modest weakness in gold," said Robert Haworth, senior
investment strategist at U.S. Bank Wealth Management.
Spot gold rose 0.5 percent to $1,606 an ounce by 2:29
p.m. EDT (1829 GMT), breaking three consecutive sessions of
U.S. gold futures for April delivery settled up
$10.50 at $1,606.20, with trading volume about 20 percent above
its 250-day average, preliminary Reuters data showed.
Higher turnover was partly because of the April-June
contract rollover ahead of April's first-notice day on Thursday.
Investors favored gold and sold equities on Wednesday after
data showed contracts to buy previously owned U.S. homes fell in
February, held back by a shortage of properties.
The 25-day inverse correlation between gold and the S&P 500
index strengthened to a negative 0.5 on Wednesday, their
strongest link since June 2012, Reuters data showed.
(Graphic showing inverse link between gold and the S&P 500
The metal's inflation-hedge appeal also received a boost
after two top Fed policymakers said the U.S. central bank should
continue its bullion-friendly bond-purchases at least through
Silver inched up 0.1 percent to $28.73 an ounce.
THIN TRADING AHEAD
Precious metals trading was expected to thin ahead of the
Good Friday holiday when most major markets will be shut.
Liquidity should return next week, when a European Central
Bank policy meeting and the U.S. non-farm payrolls report will
be the main economic events.
Reflecting the stalled momentum in gold, holdings of SPDR
Gold Trust, the world's largest gold-backed
exchange-traded fund, were unchanged for a third session on
Tuesday after record monthly outflow in February.
Platinum group metals investor now digested news the world's
two biggest platinum producers, Russia and South Africa, have
agreed to join forces to cope with an excess supply of the
Platinum and palladium also faltered. Platinum edged
up 0.2 percent to $1,578 an ounce, while palladium
climbed 0.9 percent to $767.
2:29 PM EST LAST/ NET PCT LOW HIGH CURRENT
SETTLE CHNG CHNG VOL
US Gold APR 1606.20 10.50 0.7 1590.30 1608.10 47,974
US Silver MAY 28.612 -0.067 -0.2 28.080 28.785 43,236
US Plat APR 1579.80 13.80 0.9 1567.70 1582.00 4,477
US Pall JUN 768.30 6.90 0.9 754.50 771.50 2,818
Gold 1606.00 7.41 0.5 1591.83 1608.00
Silver 28.730 0.020 0.1 28.140 28.800
Platinum 1578.00 3.50 0.2 1571.00 1580.00
Palladium 767.00 6.50 0.9 756.50 768.00
TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG
US Gold 205,972 201,664 172,729 13 0.51
US Silver 46,582 58,882 52,077 18.61 -1.27
US Platinum 14,591 15,706 11,735 14.97 -0.02
US Palladium 2,834 7,840 5,219
(Additional reporting by Clara Denina in London; Editing by Jan
Harvey, Alison Birrane and Marguerita Choy)