July 3, 2012 / 10:41 AM / in 5 years

PRECIOUS-Gold up 1.5 pct on easing hopes, signs of slowdown

5 Min Read

* 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 (Reuters) - 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
copper. 
    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)

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