June 25, 2014 / 10:00 AM / 3 years ago

PRECIOUS-Gold rises after data shows U.S. economy shrinks in Q1

* U.S. GDP falls 2.9 pct in Q1, worst in five years
    * Platinum up on lingering worries as workers return
    * Coming up: U.S. personal income, jobless claims Thurs

 (Adds comment, second byline, dateline, updates market
    By Frank Tang and Jan Harvey
    NEW YORK/LONDON, June 25 (Reuters) - Gold rose slightly on
Wednesday after U.S. growth data came in weaker than expected,
hitting the dollar, but bullion's failure to extend gains
suggested some investors were taking profits after prices hit a
two-month high in the previous session, traders said.
    The yellow metal's appeal as a hedge increased after data
showed the U.S. economy contracted at a much steeper pace in the
first quarter than previously estimated, turning in one of its
worst-ever non-recession performances. 
    Gold has gained almost 4 percent in the last four sessions
to Tuesday's two-month high at $1,325.90. Bullion prices rose on
fears the Iraq conflict could escalate and a perceived lack of
commitment by the Federal Reserve to raise interest rates,
triggering a heavy bout of short covering.
    "The market needed a big washout on the upside to get it
back to a semblance of normality," said David Govett, head of
precious metals at Marex Spectron. "Now it has done enough, and
there is no particular reason to buy it up here."
    Spot gold was up 0.2 percent at $1,319.85 an ounce by
3:01 p.m. EDT (1901 GMT).
    U.S. COMEX gold futures for August delivery settled
up $1.30 an ounce at $1,322.60, with trading volume about 10
percent below its 30-day average, preliminary Reuters data
    Silver was up 0.4 percent at $20.95 an ounce.
    Demand for gold was lackluster in Asia, home of the main
consumers of physical metal, with dealers reporting that
price-sensitive buyers had been put off by its latest rally,
dealers said.
    The head of the state-backed Shanghai Gold Exchange (SGE)
said on Wednesday that China must have a bigger influence on the
global gold market as the top consumer of the precious metal, as
the country targets establishing its own pricing benchmark.
    China, along with exchanges in Singapore and Hong Kong, are
launching gold contracts this year in a bid to tap a market
looking for a viable alternative to the metal's global benchmark
that is under regulatory scrutiny. 
    Spot platinum edged up 0.2 percent to $1,466.25 an
ounce, while spot palladium climbed 0.3 percent to $829
an ounce.
    South African mine workers returned to the Marikana
operations of platinum producer Lonmin after wage deals
were signed to end a five-month strike. 
    However, analysts said looming job cuts could rekindle labor
unrest, underpinning platinum group metal prices.
 3:22 PM EST     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold AUG   1322.60   1.30   0.1  1305.40 1325.60  126,552
 US Silver SEP  21.171  0.074   0.4   20.760  21.220   35,210
 US Plat JUL   1473.20   1.30   0.1  1454.80 1477.70   13,712
 US Pall SEP    833.25   2.85   0.3   822.30  834.75    2,946
 Gold          1319.85   2.25   0.2  1311.00 1324.65         
 Silver         20.950  0.080   0.4   20.740  21.130
 Platinum      1466.25   2.45   0.2  1454.00 1473.00
 Palladium      829.00   2.70   0.3   823.45  832.75
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        135,454   145,203   163,861     13.35    0.06
 US Silver      108,180    61,670    56,139     19.71    0.32
 US Platinum     25,038    15,825    12,400     14.82   -0.59
 US Palladium     3,007     7,636     5,885     19.56   -0.93
 (Additional reporting by Lewa Pardomuan in Singapore; Editing
by William Hardy and Nick Zieminski)

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