January 23, 2013 / 3:50 AM / 5 years ago

PRECIOUS-Gold holds near 1-month high; economic recovery hopes weigh

* US House expected to pass bill on nearly 4-mth extension
of debt ceiling
    * Spot silver pauses after seven-day rally
    * Spot gold may rise to $1,706/oz - technicals
    * Coming Up: Euro zone consumer confidence, Jan; 1500 GMT

 (Adds details, comments; updates prices)
    By Rujun Shen
    SINGAPORE, Jan 23 (Reuters) - Gold held near a one-month
high on Wednesday as investors weighed supportive easy monetary
policies of central banks against a strengthening global
economic recovery that would make riskier assets more
    Recent upbeat data from the United States, China and even
Europe has triggered rallies in equities and precious metals
with industrial applications, including silver, platinum and
palladium, putting gold in the shadow. 
    And the U.S. debt ceiling talks, seen as a potential threat
to the recovery of the world's top economy, have shown positive
signs, as the House of Representatives plans to pass a bill on a
nearly four-month extension of the borrowing limit.
    "It looks like the debt ceiling problem is solved for the
time being, and investors would pour money into the stock market
rather than gold," said Ronald Leung, chief dealer at Lee Cheong
Gold Dealers in Hong Kong.
    The Standard & Poor's 500 index hit a five-year high
in the previous session, up 4.6 percent so far this month,
outperforming the gain of 1 percent in gold -- the smallest
gainer in the precious metals complex over the same period.
    Spot gold was little changed at $1,691.84 an ounce by
0716 GMT. It hit a one-month high of $1,695.76 in the previous
session after the Bank of Japan announced bold stimulus measures
in an attempt to revive the anaemic economy. 
    U.S. gold too traded nearly flat at $1,692.10.
    Gold has been trying unsuccessfully to break through the
$1,700 resistance level since late last week.
    Technical analysis suggested spot gold may rise to $1,706 an
ounce during the day, as an upward wave c starting from the Jan.
11 low of $1,653.44 has not been completed, said Reuters market
analyst Wang Tao. 
    Buying in the physical gold market in Asia has slowed as
prices rose more than $50 from the beginning of the year,
despite the upcoming Lunar New Year holidays that typically
attract a lot of gold buying in China and other nations in the
    "Typically we should see a lot of buying from China around
this time of the year, but we are not," said a Singapore-based
dealer, "They may have already stocked up for the holiday
    Spot silver inched down 0.1 percent to $32.15 an
ounce, snapping a seven-day winning streak that matched a
similar run in August 2011.
    The robust inflow into silver-backed exchange-traded funds
has helped spot silver prices rally more than 6 percent so far
this year, as the metal's exposure to a quickened pace of
economic growth attracted investors.
    Holdings of iShares Silver Trust, the world's largest
silver ETF, stood at 10,689 tonnes on Jan. 22, up 604.9 tonnes,
or nearly 6 percent, from the end of 2012.
    By comparison, SPDR Gold Trust, the world's top gold
ETF, saw an outflow of nearly 15 tonnes so far this year. 
    Analysts polled by Reuters expected silver to recover from
last year's decline before picking up next year. Gold could see
average record highs this year and the next, but its bull run
may be topping out. 
 Precious metals prices 0716 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1691.84    0.24   +0.01      1.03
  Spot Silver        32.15   -0.04   -0.12      6.18
  Spot Platinum    1686.71   -6.67   -0.39      9.88
  Spot Palladium    722.47   -1.53   -0.21      4.40
  COMEX GOLD FEB3  1692.10   -1.10   -0.06      0.97        11315
  COMEX SILVER MAR3  32.19    0.01   +0.04      6.48         3525
  Euro/Dollar       1.3299
  Dollar/Yen         88.12
  COMEX gold and silver contracts show the most active months
 (Edited by Muralikumar Anantharaman)

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