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PRECIOUS-Gold falls after data-inspired rally; Europe in focus
June 4, 2012 / 9:56 AM / 5 years ago

PRECIOUS-Gold falls after data-inspired rally; Europe in focus

* Gold falls on profit-taking after Friday's surge
    * Bullish double bottom provides technical support
    * U.S. COMEX open interest up, suggests new buying
    * Coming up: U.S. ISM service-sector index Tuesday

 (Recasts, updates comment, market prices; changes byline,
dateline, previously LONDON)	
    By Frank Tang	
    NEW YORK, June 4 (Reuters) - Gold fell on Monday as bullion
investors cashed in some of the previous session's sharp gains
to cover losses in U.S. equities, which came under pressure from
signs of a U.S. economic slowdown and Europe's debt crisis.	
    The metal, which rallied 4.3 percent on Friday, took a hit
from renewed selling on Wall Street as financial markets focused
on Tuesday's emergency talks among Group of Seven finance chiefs
to discuss the euro zone's woes. 	
    Bullion broke its trend of trading in sync with riskier
assets last week with a 3.5 percent rise, after Friday's
surprisingly weak U.S. payrolls report stoked talk that further
stimulus measures may be necessary to reignite growth.	
    But the metal has so far this year failed to draw sustained
safe-haven bids despite the turmoil in Europe and signs of
economic slowdown in the United States and China.	
    "Right now the tools to deal with the European crisis and
the U.S. economy are limited and questionable," said Jeffrey
Sica, chief investment officer at SICA Wealth Management LLC,
which has $1 billion in assets.	
    "So that puts the financial market in a very vulnerable
position and enhances the desire to accumulate safe-haven-type
investments" such as gold, Sica said.	
    Spot gold was down 0.7 percent at $1,614.89 an ounce
by 2:21 p.m. EDT (1821 GMT).	
    U.S. COMEX gold futures for August delivery settled
down $8.20 at $1,613.90 an ounce, with volume sharply below its
30-day average and the previous session's turnover.	
    COMEX's gold open interest on Friday climbed more than 2
percent, suggesting the rally was boosted by new bullish bets by
funds and money managers rather than short-covering, traders
    Technical support should underpin gold as the metal formed a
clear double bottom on daily charts after it posted a bullish
outside week last week, CitiFX strategists said in a note.	
    Extremely low returns on perceived safe havens such as U.S.
and German bonds are also helping gold.	
    "Low U.S. and German bond yields leave investors with few
quality assets to choose from and may benefit gold," said James
Steel, chief commodities analyst at HSBC.	
    Steel said gold prices appeared to have broken away from
their close correlation to U.S. Treasury bonds, a trend the two
had shown earlier this year.	
    U.S. 10-year Treasury bond yields, which move in the
opposite direction to bond prices, were driven to a record low
below 1.5 percent on F riday after the payrolls data. Yields rose
from historic lows on Mo nday. 	
    Among other precious metals, silver was down 1.7
percent at $28.16 an ounce. Spot platinum fell 1.2
percent to $1,424.25 an ounce, while spot palladium edged
up 0.2 percent at $609.76 an ounce. 	
 2:21 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold AUG   1613.90  -8.20  -0.5  1610.00 1629.70  124,009
 US Silver JUL  28.007 -0.505  -1.8   27.955  28.680   30,189
 US Plat JUL   1427.30  -5.90  -0.4  1423.20 1449.00    5,442
 US Pall SEP    613.90  -0.10   0.0   605.75  616.45    1,717
 Gold          1614.89 -10.71  -0.7  1609.48 1627.69         
 Silver         28.160 -0.480  -1.7   28.010  28.660
 Platinum      1424.25 -17.25  -1.2  1427.25 1445.00
 Palladium      609.76   1.41   0.2   607.52  613.25
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        127,037   201,920   194,847     25.24    1.98
 US Silver       33,317    52,371    52,528     34.04    0.42
 US Platinum      5,649     7,458     7,987        18    0.00
 US Palladium     1,743     5,777     4,593                  
 (Additional reporting by Jan Harvey in London; Editing by Dale

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