* Volatile currency trades boost gold's safe-haven appeal
* Heavy ETF outflows seen as Cyprus plans to sell gold
* U.S. weekly jobless claims fall more than expected
* Coming up: EU finance minister meeting in Dublin Friday
(Updates throughout, adds comments, changes byline, adds NEW
YORK to dateline)
By Frank Tang and Clara Denina
NEW YORK/LONDON, April 11 Gold rose on Thursday
as a drop in the dollar triggered bargain hunting after the
previous session's sharp drop on news of possible gold sale by
Cyprus and uncertainty over Fed's monetary stimulus.
An improving U.S. economic outlook and rallies in the
equities market, however, could pressure bullion prices in the
near term, analysts said.
The metal was boosted by currency fluctuations as the dollar
fell against the euro but rose to a four-year high against the
yen. Gold has benefited from the Bank of Japan's pledge last
week to inject around $1.4 trillion into its economy to battle
Bullion's gains came as the S&P 500 index climbed to
fresh all-time intraday highs after U.S. data showed jobless
claims dropped more than expected.
Gold has recently moved in opposite directions to U.S.
equities and an overall improvement in U.S. economic indicators
has hurt bullion's safe-haven appeal.
"Regardless of Fed policy, there are many more attractive
assets to profit on than gold right now. It looks like the trade
right now is buy S&P and sell gold," said Mihir Dange, COMEX
gold options floor trader for Arbitrage LLC.
Spot gold rose 0.4 percent to $1,564.10 an ounce by
2:26 PM (1826 GMT), having rebounded from a one-week low of
U.S. Comex gold futures for June delivery settled up
$6.10 at $1,564.90 an ounce, as trading volume about 25 percent
below its 30-day average, preliminary Reuters data showed.
Bargain hunters bought gold after bullion dropped 1.6
percent on Wednesday after minutes of the Federal Reserve's last
policy meeting showed the U.S. central bank was inching closer
to ending its monetary stimulus program.
On charts, gold should benefit from technical buying as the
metal is currently testing the bottom of a broad $1,790-$1,530
trading range over the past 18 months, said Ashmead Pringle,
president of GreenHaven Continuous Commodity Index fund.
The market now looks forward to Friday when EU finance
ministers will begin a two-day meeting in Dublin, most likely to
discuss fallout from the messy bailout of Cyprus among other
ETF OUTFLOW, CYPRUS GOLD RESERVES EYED
Sentiment among bullion investors was weakened by the
possible plan by Cyprus to sell gold.
Holdings of the largest gold-backed exchange-traded-fund
(ETF), New York's SPDR Gold Trust GLD, fell 1.4 percent to
38.051 million ounces on Wednesday.
Gold prices started the day lower as a European Commission
assessment, dated April 9, of what Cyprus needs to do as part of
its European Union/International Monetary Fund bailout showed
the island is expected to sell excess gold reserves to raise
around 400 million euros ($523 million).
At current prices, 400 million euros' worth of gold amounts
to around 10 tonnes of metal. Cyprus' total bullion reserves
stood at 13.9 tonnes at end-February, according to data from the
World Gold Council.
Among other precious metals, silver was up 0.4
percent at $27.73 an ounce. Palladium, which fell to its
lowest in three months in the previous session, was up 1.6
percent to $730, while platinum climbed 0.5 percent to
$1,531 an ounce.
2:26 PM EST LAST/ NET PCT LOW HIGH CURRENT
SETTLE CHNG CHNG VOL
US Gold JUN 1564.90 6.10 0.4 1553.00 1568.10 122,048
US Silver MAY 27.697 0.044 0.2 27.340 27.785 35,896
US Plat JUL 1535.80 6.00 0.4 1517.80 1544.00 7,305
US Pall JUN 733.35 12.50 1.7 714.05 740.00 4,524
Gold 1564.10 5.96 0.4 1553.10 1567.81
Silver 27.730 0.120 0.4 27.450 27.830
Platinum 1531.00 8.00 0.5 1520.00 1540.50
Palladium 730.00 11.50 1.6 718.00 735.50
TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG
US Gold 135,849 186,540 172,899 14.5 -0.10
US Silver 44,742 45,919 52,377 21.31 1.15
US Platinum 7,459 15,251 11,861 14.18 -1.28
US Palladium 4,871 4,805 5,240
(Editing by Jane Baird, Keiron Henderson and Bob Burgdorfer)