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PRECIOUS-Gold down on strong US data, ignores spending cuts
March 1, 2013 / 11:26 AM / in 4 years

PRECIOUS-Gold down on strong US data, ignores spending cuts

5 Min Read

* No safe-haven bids as deep U.S. spending cuts seen gradual
    * SPDR Gold Trust holdings drop for eighth straight session
    * U.S. gold, silver coins post strong performance in Feb.
    * Coming up: U.S. government spending cuts to start Saturday

 (Adds market details, graphic link, updates prices)
    By Frank Tang
    NEW YORK, March 1 (Reuters) - Gold fell on Friday, posting
its third straight weekly decline, as its reputation as a safe
haven failed to attract buyers after strong U.S. economic data
and global markets remained relatively calm ahead of
wide-ranging U.S. government spending cuts.
    Bullion dropped as the dollar rose after U.S. economic data
including consumer spending, consumer confidence and factory
activity all pointed to a pickup in economic growth. Some
investors believe a better U.S. outlook could prompt the Federal
Reserve to halt its stimulus earlier than expected.
 
    Gold stayed weaker as the U.S. government was set to begin
across-the-board federal spending cuts, known as
"sequestration," that threaten to hinder the economic recovery,
after President Barack Obama and congressional leaders failed to
find an alternative budget plan. 
    "The sequestration is not so supportive to gold itself
because it is gradual and not going to generate a lot of
turmoil," said Peter Buchanan, senior economist at CIBC World
Markets.
    "However, the fact that the Republicans and Democrats have
been unable to agree on that boast poorly for their ability to
ward off an impasse over the debt ceiling in mid May," he said. 
  
    Analysts now closely monitor how a divided Congress will
deal with the next debt ceiling, which is scheduled to come into
effect on May 18. Gold rallied to an all-time high in September
2011 a month after the United States lost its top-tiered credit
rating that year.
    Spot gold was down 0.3 percent to $1,575.19 an ounce
by 3:13 PM (2013 GMT). 
    U.S. gold futures for April delivery settled down
$5.80 at $1,572.30, with trading volume about 10 percent above
250-day average, preliminary Reuters data showed.
    Gold fell in tandem with sharp losses in other commodities
such as copper and crude oil after poor economic data in China
and the euro zone hurt sentiment. 
    A flight to quality assets failed to materialize as global
markets largely shrugged off the U.S. spending cuts. Rating
agency Standard & Poor's on Friday said that U.S. budget cuts
would likely have only limited effects. 
    Gold is at a key juncture as prices are possibly working on
a "double bottom" after a series of declines since its October
high, said Mark Arbeter, chief technical strategist at S&P
Capital IQ. (Graphic: link.reuters.com/qeh46t)
    A break above downward trendline resistance at $1,650 will
break gold's bearish trend, Arbeter said.
    Silver, which tends to be more volatile and often
tracks gold, was sharply off an earlier six-month low of $27.94.
It was last traded unchanged at $28.51 an ounce.
    
    GOLD SILVER COINS OUTPERFORM ETFS
    Underlying investment demand for gold remain subdued.
    Holdings of the SPDR Gold Trust, the world's top gold
ETF, dropped to a nearly seven-month low of 1,254.49 tonnes on
Feb. 28 in its eighth straight session of decline, finishing
February with a record monthly outflow of 73.6 tonnes.
    However, sales of American Eagle gold coins rose sharply
year-on-year in February, and silver coin sales posted their
strongest performance for the month since 1986, standing in
sharp contrast to unprecedented ETF selling.
    Platinum group metal investors now digested slightly better
U.S. auto sales. 
    Platinum fell 0.6 percent to $1,569.99 an ounce,
palladium dropped 0.8 percent to $720.47 an ounce.
    
 3:13 PM EST     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold APR   1572.30  -5.80  -0.4  1564.00 1586.90  176,969
 US Silver MAY   28.49  0.058   0.2   27.925  28.790   51,083
 US Plat APR   1573.50 -10.00  -0.6  1565.50 1588.90   14,108
 US Pall JUN    720.40 -14.15  -1.9   715.75  732.90    4,558
                                                               
 Gold          1575.19  -4.57  -0.3  1565.45 1586.90         
 Silver         28.510  0.000   0.0   27.990  28.760
 Platinum      1569.99 -10.00  -0.6  1568.00 1586.75
 Palladium      720.47  -5.75  -0.8   718.02  731.00
                                                               
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        193,477   201,263   177,166     15.12    0.16
 US Silver       57,114    64,265    53,040     23.21    0.49
 US Platinum     15,201    13,755    10,857     18.83    0.20
 US Palladium     4,717     9,012     5,240                  
                                                               
   

 (Additional reporting by Clara Denina in London; Editing by
David Gregorio and Martin Golan)

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