* Gold posts biggest one-day rally in two weeks
* Spain's new austerity measures increase safe-haven bids
* Talk of additional China stimulus supportive
* Coming up: U.S. August personal income Friday
(Adds details, updates comment, market activity)
By Frank Tang
NEW YORK, Sept 27 Gold rose 1.5 percent on
T hursday, its biggest daily gain in two weeks, on hopes for
additional monetary stimulus from China and fresh austerity
steps in Spain, which renewed fears about the euro zone.
Bullion extended early gains after Spain announced a
detailed timetable for economic reforms and a tough 2013 budget
based mostly on spending cuts in what many see as an effort to
pre-empt the likely conditions of an international bailout.
Gold priced in euro terms surged over 1 percent to a record,
underscoring the metal's traditional safe-haven appeal
especially among Europeans in times of economic uncertainty.
"Gold buyers are responding to stimulus possibilities," said
George Gero, vice president of RBC Capital Markets.
Lingering economic weakness in the euro zone highlighted by
Spain's new austere budget, and slow growth in China and United
States provided reasons for the central banks to take more
actions to boost growth, Gero said.
Spot gold rose 1.4 percent to $1,776.34 an ounce by
2:59 p.m. EDT (1859 GMT), snapping three consecutive days of
losses. Gold is within striking distance of this year's high at
$1,790.30, set on Feb. 29.
U.S. gold futures for December delivery settled up
$26.90 an ounce at $1,780.50, with volume about 10 percent above
its 30-day average, preliminary Reuters data showed.
There was active buying of bull call spreads and other
bullish option plays as some investors bet gold could rise
sharply by the year-end, said independent COMEX gold option
floor trader Jonathan Jossen.
EUROPE, CHINA IN FOCUS
The outlook for Europe's economy darkened with euro zone
business confidence falling to a three-year low and a range of
economic indicators across the continent pointing toward
recession. Meanwhile, U.S. data also pointed to a sharp slowdown
in manufacturing activity.
"There is speculation that China will engage in additional
stimulus measures," said Bill O'Neill, partner at commodity
investment firm LOGIC Advisors.
The metal gained further after news that China's central
bank had injected a record amount of cash this week, fuelling
talk that China may take steps to boost the country's weak stock
market, sparking a global equities rally.
Gold is on track to end September with its largest quarterly
gain in more than two years, of 11 percent, after the U.S.
Federal Reserve unveiled a third round of bullion-friendly
monetary stimulus this month.
Silver rallied 2 percent to $34.61 an ounce.
Among platinum group metals, platinum traded up 1
percent at $1,644.70 an ounce, and spot palladium added
0.8 percent at $630.30 an ounce.
Platinum prices are set to end the quarter up around 13
percent, while palladium is heading for an 8 percent gain.
Platinum group metal prices have been lifted by unrest in South
Africa's mining sector, where violence at a mine operated by
No.3 producer Lonmin killed 45 people.
2:59 PM EDT LAST/ NET PCT LOW HIGH CURRENT
SETTLE CHNG CHNG VOL
US Gold DEC 1780.50 26.90 1.5 1753.20 1782.90 158,306
US Silver DEC 34.666 0.726 2.1 33.905 34.815 43,277
US Plat OCT 1645.90 11.50 0.7 1627.90 1657.80 4,697
US Pall DEC 635.40 9.55 1.5 626.30 637.95 2,479
Gold 1776.34 24.75 1.4 1751.80 1780.20
Silver 34.610 0.680 2.0 33.880 34.730
Platinum 1644.70 16.80 1.0 1631.25 1655.20
Palladium 630.30 4.80 0.8 629.15 635.00
TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG
US Gold 169,893 155,688 184,198 16.21 -0.44
US Silver 44,942 60,023 52,774 35 7.00
US Platinum 15,737 19,414 9,520 22.76 0.01
US Palladium 2,526 7,996 4,651
(Additional reporting by Jan Harvey and Amanda Cooper in
London; Editing by Dale Hudson)