March 12, 2013 / 12:10 PM / 5 years ago

PRECIOUS-Gold rises on euro zone jitters, ETF flow eyed

* Bundesbank's chief says euro zone crisis not over
    * ETFs liquidation continues but at slower pace
    * Gold trading volume in China up 24 pct in Jan-Feb
    * Coming up: US import, export prices, retail sales Weds

 (Adds market activity, updates prices)
    By Frank Tang
    NEW YORK, March 12 (Reuters) - Gold rose nearly 1 percent on
Tuesday after a top European Central Bank official said the euro
zone crisis was not over, but the metal remained vulnerable as
redemptions in gold-backed exchange-traded funds continued,
analysts said.
    Bundesbank's chief Jens Weidmann, also a member of the ECB
Governing Council, also said the German central bank had set
aside billions more euros against what it deemed risky ECB
    The metal briefly rose to almost $1,600 an ounce, a near
two-week high. Last week, it had found support in an area near
$1,560 an ounce, weighed down by an equities rally and an
improving U.S. economic outlook. 
    A lack of buying interest in gold investment products,
however, could trigger another round of pullback, analysts said.
    "Prices appear to be building some mild upside momentum, but
until liquidation in gold exchange-traded funds (ETFs) ceases,
we do not expect too much on the upside for gold," said James
Steel, metals analyst at HSBC.
    Spot gold was up 0.8 percent at $1,593.20 by 4:22
p.m. EDT (2022 GMT), its biggest one-day gain in two weeks. 
    Earlier, gold rose as much as 1.1 percent to $1,598.20 an
ounce, its highest level since Feb 28. 
    U.S. gold futures for April delivery settled up
$13.70 at $1,591.70 an ounce. Trading volume was about 25
percent below its 30-day average, preliminary Reuters data
    A brighter U.S. economic outlook appears to prompt momentum
investors to favor equities over gold.
    Holdings of SPDR Gold Trust, the world's biggest
gold-backed ETF, fell to the lowest since October 2011 at
1,236.729 tonnes as of Monday.
    Other analysts, however, said that the pace at which ETFs
investors exit their positions has been easing in the past week,
which should help stem recent losses in gold.
    On Friday, gold slid to a two-week low near $1,560 before
ended flat after a better-than-expected U.S. nonfarm payrolls
    The Dow Jones industrial average ended little changed
on Tuesday after it hit a record high for the fifth consecutive
session on Monday. The broad-based S&P 500, however,
finished slightly lower on euro zone worries. 

    Physical buying continued in Asia, spurred by comments from
Kikuo Iwata, nominee to the Bank of Japan's deputy governor
role, reiterating that the central bank must boost the
quantitative easing aiming at ending years of deflation. 
    Precious metals interest remains high in China, with average
daily trading combined volumes on the three main gold contracts
on the Shanghai Gold Exchange  
 up 24 percent in the first two months of the year,
according to Reuters calculations.
    With major macro economic data lacking during the week, the
next macro event is U.S. consumer inflation data on Friday,
which is likely to provide some trading direction.
    The gold market was also monitoring the U.S. budget crisis,
which some see as a threat to the nascent recovery in the
world's top economy.     
    Among other precious metals, silver was up 0.8
percent to $29.17, tracking gold's upward move. Platinum 
eased 66 cents to $1,592.74, and palladium fell 0.8
percent to $769.97 an ounce.
 4:22 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold APR   1591.70  13.70   0.9  1578.80 1597.60  138,110
 US Silver MAY  29.171  0.318   1.1   28.870  29.350   25,861
 US Plat APR   1595.00  -6.20  -0.4  1590.20 1615.00   11,891
 US Pall JUN    775.50  -3.70  -0.5   769.50  781.90    2,635
 Gold          1593.20  12.81   0.8  1580.58 1598.20         
 Silver         29.170  0.220   0.8   28.910  29.350
 Platinum      1592.74  -0.66   0.0  1594.50 1610.50
 Palladium      769.97  -6.09  -0.8   772.75  778.25
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        163,876   202,353   175,274     12.82   -0.59
 US Silver       27,846    63,648    52,813      20.2   -0.72
 US Platinum     14,601    13,711    10,841     17.23   -0.80
 US Palladium     2,677     9,094     5,257                  
 (Additional reporting by Clara Denina in London and Rujun Shen
in Singapore; Editing by Bob Burgdorfer)
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