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PRECIOUS-Gold holds above $1,600 as Cyprus fallout supports
March 28, 2013 / 4:00 AM / 5 years ago

PRECIOUS-Gold holds above $1,600 as Cyprus fallout supports

* Gold to retest $1,550 in 3 months-technicals
    * Coming Up: U.S. weekly jobless claims; 1230 GMT

 (Updates prices, physical activity, comments no Cyprus)
    By Lewa Pardomuan
    SINGAPORE, March 28 (Reuters) - Gold held steady above
$1,600 an ounce on Thursday on worries the Cyprus rescue deal
could become a blueprint for solving banking crises in the euro
zone, supporting the precious metal's safe-haven appeal.
    Gold is on track for a 1.6 percent gain in March, its first
monthly rise in six, amid concerns about the financial stability
of the euro zone stoked by the crisis in Cyprus, where hundreds
of anxious depositors are expected to besiege banks when they
finally reopen later in the day.
    "We continue to maintain the short-term outlook out of
Europe remains uncertain enough to give the gold market a degree
of support for the balance of the week and heading into early
next week," said Edward Meir, metals analyst at futures
brokerage INTL FCStone. 
    "Although the Cypriot situation will likely fade from the
headlines over the course of the next month, the unusual
circumstances behind the country's rescue will likely linger for
some time longer."
    Gold was little changed at $1,604.20 an ounce by 0722
GMT, still below a 1-month high around $1,616 hit last week. It
rallied to an all-time high around $1,920 in September 2011,
when a worsening debt crisis in Europe sparked a buying rush.
    U.S. gold dropped $2.30 to $1,603.90 an ounce.
    The physical market was mostly subdued as jewellers and
speculators stayed on the sidelines ahead of the Easter holiday,
keeping premiums in Hong Kong and Singapore unchanged at between
$1.20 and $1.50 an ounce to the spot London prices. 
    "We are trading within those premiums," said a dealer in
Singapore, who offered gold bars at $1.20 above the spot price.
"It's quiet out here." 
    The Cyprus bailout is the first in Europe's single currency
zone to impose losses on bank depositors and raises the prospect
of savers pulling money out of some other euro zone countries
perceived to be weak -- a worry that supports gold.
    But German Finance Minister Wolfgang Schaeuble said Cyprus
was a very special case and the European Union had found the
right solution for it with its deal for a 10 billion euro
bailout tied to the imposition of losses on bank depositors.
    Cyprus will reopen its banks with tight controls imposed on
transactions to prevent fleeing depositors from cleaning out the
vaults in a catastrophic bank run. 
    "Of course we are waiting for the banks to reopen today,"
said Ronald Leung, director of Lee Cheong Gold Dealers in Hong
Kong, referring to the lenders in Cyprus.
    "I think for the time being gold is rangebound. The upside
at $1,610 or $1,615 will be capped for a while. When the price
dips below $1,600, maybe there will be scale-down buying."
    Also underpinning gold was hopes the Federal Reserve will
maintain its loose monetary policy after top policymakers said
the U.S. central bank should continue its bullion-friendly
bond-purchases at least through 2013. 
    Fears that central banks' money-printing to buy assets will
stoke inflation have been a key driver in boosting gold, sending
prices to an 11-month high last October after the Fed announced
its third round of aggressive economic stimulus.
  Precious metals prices 0722 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1604.20   -0.59   -0.04     -4.20
  Spot Silver        28.69    0.06   +0.21     -5.25
  Spot Platinum    1581.00    2.04   +0.13      3.00
  Spot Palladium    762.00   -3.00   -0.39     10.12
  COMEX GOLD APR3  1603.90   -2.30   -0.14     -4.29          336
  COMEX SILVER MAY3  28.67    0.06   +0.20     -5.16         5037
  Euro/Dollar       1.2799
  Dollar/Yen         94.18
  COMEX gold and silver contracts show the most active months
 (Editing by Himani Sarkar)

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