February 28, 2013 / 4:11 AM / 4 years ago

PRECIOUS-Gold heads for longest run of monthly drops in 16 years

* SPDR Gold Trust stages longest stretch of outflow on
record
    * Spot gold may drop to $1,579/oz -technicals
    * Coming up: U.S. Q4 GDP; 1330 GMT

 (Adds details; updates prices)
    By Rujun Shen
    SINGAPORE, Feb 28 (Reuters) - Gold inched up on Thursday,
but was still headed for its longest stretch of monthly declines
in more than 16 years as an improving economic outlook dimmed
its safe-haven appeal.
    Gold sank nearly 1 percent in the previous session, wiping
out gains on Tuesday fuelled by U.S. Fed Chairman Ben Bernanke's
reassurance of the bank's easing measures, even though Bernanke
continued to defend the programme in a second day of
congressional testimony. 
    "The market was having a bit of a Bernanke hangover from the
night before, realising that it might have overreacted," said a
Singapore-based trader.
    U.S. economic data remained largely upbeat, with planned
business spending recording its largest increase in more than a
year in January and contracts to buy previously owned homes
approaching a near three-year peak. 
    That added to recent flows of data from the United States
and elsewhere showing evidence of an economic recovery, which
discourages investors from buying gold as a risk hedge, said
Chen Min, an analyst at Jinrui Futures in the southern Chinese
city of Shenzhen.
    "Gold's sentiment remains fickle, as it lacks a significant
catalyst to propel the rally into the thirteenth year and people
are more sensitive to even slightly bearish signs."
    An exodus from the SPDR Gold Trust, the world's
biggest gold-backed exchange-traded fund, continued for a
seventh consecutive session, marking the longest stretch of
outflow in the fund's history. 
    Spot gold edged up 0.3 percent to $1,601.40 an ounce
by 0714 GMT, on course for a monthly decline of nearly 4
percent. It has been in the red for five straight months, the
longest such losing streak since late 1996 to early 1997.
    U.S. gold was also up 0.3 percent, to $1,601.20.
    Technical analysis suggested spot gold could retreat to
$1,579 an ounce during the day, said Reuters market analyst Wang
Tao. 
    
    Signs of easing fears over Italy also weighed on gold
sentiment, after the country's first bond auction since the
inconclusive election met with solid demand. 
    The United States is approaching the "sequester" on Friday,
or automatic spending cuts in government programmes, barring any
last-minute budget deal by the lawmakers. 
    The U.S. fiscal crisis could threaten the fledgling recovery
of the world's top economy, which might argue for further
monetary easing and boost interest in traditional safe havens
such as gold, analysts have said.
    Investors are also closely watching India's announcement of
its budget for fiscal year 2013/14, in which many had expected
it to increase curbs on gold imports to the world's top gold
consumer. 
    
    Precious metals prices 0714 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1601.40    4.19   +0.26     -4.37
  Spot Silver        29.12    0.13   +0.45     -3.83
  Spot Platinum    1598.24    2.32   +0.15      4.12
  Spot Palladium    744.22    3.22   +0.43      7.55
  COMEX GOLD APR3  1601.20    5.50   +0.34     -4.45        19591
  COMEX SILVER MAR3  29.08    0.14   +0.47     -3.80          138
  Euro/Dollar       1.3138
  Dollar/Yen         92.38
  COMEX gold and silver contracts show the most active months
  

 (Editing by Tom Hogue)

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