* Dollar, US Treasuries yield fall ahead of Fed minutes
* Gold put options premium down, calls discount vanishes
* US gold coins demand tumbles, Chinese India buying soft
* Coming up: US existing home sales, FOMC minutes Weds.
By Frank Tang and Zhe Sun
NEW YORK/LONDON, Aug 20 Gold prices rose on
Tuesday as the dollar weakened and U.S. Treasury bond yields
retreated on lingering uncertainty over when the Federal Reserve
will reduce its economic stimulus program.
Gold fell almost 1 percent earlier in the session, then
turned higher as speculators bought futures to cover their
bearish bets ahead of Wednesday's release of the minutes of the
Fed's July policy meeting.
Silver also recovered after initially tumbling 4 percent.
Traders said the uncertainty over when the U.S. central bank
will taper its $85 billion in monthly bond purchases benefits
gold, as bullion prices have already factored in the scaling
back of stimulus from as early as September.
The metal has gained 8 percent over the last two weeks. This
has helped turn the gold option market less bearish with the
high volatility premium on puts falling and some calls no longer
being offered at a discount.
"I have noticed a small reversal in call skew. People are
starting to bid for calls again and the discount is
diminishing," said Albert Ng, a market maker and portfolio
manager at Aurum Options Strategies in New York.
Spot gold was up 0.5 percent at $1,372.67 an ounce by
1:44 PM EDT (1744 GMT), rebounding $20 from its low of
U.S. Comex gold futures for December delivery settled
up $6.90 at $1,372.60 an ounce, with trading volume about 70
percent below its 30-day average, preliminary Reuters data
Gold rose as the dollar index fell 0.4 percent, while
the yield for 10-year U.S. Treasuries dropped from a two-year
high as investors scooped up relatively cheap U.S. government
PHYSICAL DEMAND SLOWS
Demand for U.S. gold coins has plunged in recent weeks as
the unprecedented buying by retail investors that helped bullion
prices recover from their historic selloff four months ago has
Gold buying from China and India, the world's largest
bullion consumers, also showed signs of slowing.
In India, traders said they will start importing gold again
over the next week, after the county's central bank clarified a
rule that stopped the flow of the precious metal into the
country at the end of July.
Silver was down 0.4 percent at $23.02 an ounce.
Platinum rose 0.8 percent to $1,514.24 an ounce, while
palladium eased 0.3 percent to $744.93 an ounce.
1:44 PM EDT LAST/ NET PCT LOW HIGH CURRENT
SETTLE CHNG CHNG VOL
US Gold DEC 1372.60 6.90 0.5 1351.60 1378.00 127,119
US Silver SEP 23.071 -0.095 -0.4 22.280 23.310 55,372
US Plat OCT 1525.50 16.50 1.1 1496.70 1527.10 7,241
US Pall SEP 749.65 -3.25 -0.4 743.35 756.45 3,561
Gold 1372.67 7.19 0.5 1352.20 1376.90
Silver 23.020 -0.100 -0.4 22.330 23.310
Platinum 1514.24 11.94 0.8 1500.25 1523.50
Palladium 744.93 -2.57 -0.3 747.00 753.97
TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG
US Gold 132,857 189,833 189,713 23.3 0.25
US Silver 70,977 51,004 53,203 34.11 1.11
US Platinum 7,403 9,182 12,526 21.81 0.00
US Palladium 5,139 4,089 5,271