* Gold hits 2-week high as oil, commods rallies help
* U.S. manufacturing trend weak, lifts QE hopes
* U.S. markets to shut Wednesday on Independence Day holiday
* Coming up: US non-farm payrolls report seen key on Friday
(Adds comment, updates market activity)
By Frank Tang
NEW YORK, July 3 Gold prices rose 1.5 percent to
a two-week high on Tuesday, as signs of a slowing U.S. economy
fuelled investors' expectation that central banks around the
world will introduce new monetary stimulus.
The metal also benefited from inflation-hedge buying because
of sharp rallies in crude oil on tensions over Iran's nuclear
program rose, and as grain prices climbed as a drought in the
U.S. Midwest spurred supply fears.
Gold has gained almost 5 percent in the past two sessions
after data showed U.S. manufacturing shrank in June for the
first time in nearly three years. New orders for
U.S. factory goods rose more than expected in May but the trend
has appeared softer this year and has added to concerns the
economic recovery is losing steam.
Slowing U.S. growth, the European debt crisis and signs of
cooling in the Chinese economy suggested policymakers will be
more likely take bold steps to avoid a recession.
"We believe if evidence continues to mount that the U.S.
economy is slowing and may require further monetary stimulus,
then gold prices could get a boost rally," said James Steel,
chief commodity analyst at HSBC.
Spot gold rose 1.5 percent on the day to $1,619.90 an
ounce by 2:23 p.m. EDT (1823 GMT).
U.S. gold futures for August delivery settled up
$24.10 an ounce at $1,621.80.
Silver rose 2.9 percent to $28.27 an ounce.
Trading volume remained light for a second straight session
at 40 percent below its 30-day average, preliminary Reuters data
showed, as trading desks were thinly staffed ahead of the U.S.
Independence Day holiday on Wednesday.
The key U.S. non-farm payrolls data due on Friday will be
scrutinised by investors eager to predict the next move by the
Fed. Employers are expected to have added 90,000 new workers to
their payrolls, a Reuters survey said.
EASING HOPES BRIGHTER
Hopes for more monetary stimulus, including a third round of
a U.S. assets-buyback program known as quantitative easing
(QE3), boosted U.S. equities and industrial commodities like
The European Central Bank (ECB) could cut interest rates to
a record low later this week. Gold soared 3
percent last Friday on a deal by European leaders to shore up
banks and cut borrowing costs.
"Commodities are very sensitive to central bank liquidity
and we think gold did a great job recently of forecasting
further easing before the fact," said Mark Arbeter,
chief technical strategist of S&P Capital IQ.
However, physical demand was still lagging. Buying in Asia's
physical gold market remained thin after short-lived excitement
late last week when bullion briefly dropped below $1,550 per
ounce, before Friday's 3 percent rally.
A near record low rupee also curbed gold purchases from
India, traditionally the world's top bullion consumer.
In platinum group metals, platinum rose 2.3 percent
to $1,482.25, while palladium was up 3.8 percent at $593.20
2:23 PM EDT LAST/ NET PCT LOW HIGH CURRENT
SETTLE CHNG CHNG VOL
US Gold AUG 1621.80 24.10 1.5 1595.30 1625.70 102,187
US Silver SEP 28.28 0.781 2.8 27.390 28.445 29,217
US Plat OCT 1491.40 33.10 2.3 1449.20 1493.80 6,615
US Pall SEP 598.90 20.90 3.6 574.30 600.25 3,559
Gold 1619.90 23.22 1.5 1595.60 1624.70
Silver 28.270 0.790 2.9 27.460 28.430
Platinum 1482.25 33.50 2.3 1451.04 1484.75
Palladium 593.20 21.45 3.8 577.03 598.75
TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG
US Gold 113,097 198,244 195,449 19.76 -0.05
US Silver 31,066 61,790 58,227 30.93 0.19
US Platinum 6,746 12,350 9,064 23 0.00
US Palladium 3,569 5,080 4,602
(Additional reporting by Veronica Brown and Jan Harvey in
London; Editing by Phil Berlowitz)