April 11, 2013 / 4:26 AM / 6 years ago

PRECIOUS-Gold bounces from 1-week low on Korea tension

* Gold off near 1-week low; Korea tensions support
    * Coming Up: U.S. weekly jobless claims; 1230 GMT

 (Updates prices, adds premiums)
    By Lewa Pardomuan
    SINGAPORE, April 11 (Reuters) - Gold bounced on Thursday
from its weakest level in almost a week as rising tension on the
Korean peninsula stirred some safe-haven buying in Asia, though
gains are likely to be capped by uncertainty over the Federal
Reserve's stimulus programme.
    Heavy outflows from gold exchange-traded funds
 also weighed on the metal, in addition to
rallies in stock markets and Cyprus' plan to sell excess bullion
reserves to help finance its part of its bailout. 
    Gold hit its lowest since April 5 at $1,553.10 an
ounce before rebounding to $1,560.41 by 0606 GMT, up $2.27. 
Bullion declined more than 1 percent on Wednesday in its biggest
one-day fall since Feb. 20. 
    "I guess people are watching the North Korean missiles.
There's some tension here, and somebody is buying gold," said
Yuichi Ikemizu, branch manager for Standard Bank in Tokyo.
    "But I think the reality is the ETF is selling. Last night,
(the outflow) was around 17 tonnes, and that's a huge amount. I
think that has more impact on the market," said Ikemizu, who
pegged support level at last week's 10-month low around $1,540.
    U.S. gold for June delivery was at $1,560.30 an
ounce, up $1.50.   
    South Korea and the United States remained on high alert for
any North Korean missile launch as the North turned its
attention to celebrating its ruling Kim dynasty and appeared to
dial down rhetoric of impending war. 
    Gold had ignored the tensions earlier this week, but bargain
hunters and jewellers resurfaced on Thursday as bullion's
outlook remained patchy on fears the Fed's bullion-friendly bond
buying programme could end soon. 
    Gold had jumped to an 11-month high in October last year
after the Fed announced its third round of aggressive economic
stimulus, raising fears the central bank's money-printing to buy
assets would stoke inflation.
    "The market is already down, so you're seeing short covering
from the jewellery sector. There's a bit of buying related to
North Korea, but I think if they hit the United States, they
will face retaliation," said a dealer in Hong Kong.
    "North Korea will be finished off. I think the most
important thing is the ETF. If liquidation continues, there will
be more pressure on gold." 
    Premiums for gold bars were unchanged at $1.20 an ounce to
the spot London prices in Singapore and at $1.20 to $1.50 in
Hong Kong, suggesting that the buying interest remained
    Reaction to gold sales by Cyprus was largely muted in Asia,
although investor fears remain that other debt-stricken euro
zone members such as Portugal and Greece could follow suit.
    Cyprus, one of the euro zone's smallest economies, has to
sell most of its gold reserves to raise around 400 million euros
($523 million) - the first major gold disposal by a euro area
central bank since France sold 17.4 tonnes in the first half of
    At current prices, 400 million euros' worth of gold amounts
to just over 10 tonnes of metal. 
    "We have not made any sure future decisions yet on buying
more gold. We were aware that Cyprus was selling gold, but right
now we have no plans regarding gold purchases," said a Bank of
Korea official. 
    "About 700 to 800 tonnes of gold are traded in a single day
and 10 tonnes is very small compared to this, obviously." 
    In other markets, data underscoring a recovery in China and
Wall Street's record closing lifted Asian shares, while the
dollar was near a four-year high against the yen after the
minutes of the Fed's meeting raised expectations it could scale
back its bond-buying spree by the end of the year. 
  Precious metals prices 0606 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1560.41    2.27   +0.15     -6.82
  Spot Silver        27.57   -0.04   -0.14     -8.95
  Spot Platinum    1520.74   -2.26   -0.15     -0.93
  Spot Palladium    716.00   -2.50   -0.35      3.47
  COMEX GOLD JUN3  1560.30    1.50   +0.10     -6.89        17460
  COMEX SILVER MAY3  27.51   -0.14   -0.52     -9.00         4691
  Euro/Dollar       1.3068
  Dollar/Yen         99.68
  COMEX gold and silver contracts show the most active months


 (Additional report by Christine Kim in SEOUL; Editing by Ed
Davies and)
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