January 11, 2013 / 10:51 AM / 5 years ago

PRECIOUS-Gold falls 1 pct on China inflation, ends week flat

* Chinese inflation hits 7-month high in December
    * Prices slide below 200-day moving average
    * Negative investor sentiment seen as entry point-Hathaway

 (Adds market details, updates prices)
    By Frank Tang
    NEW YORK, Jan 11 (Reuters) - Gold fell around 1 percent on
Friday, ending nearly flat for the week, after growing inflation
pressure in China dented hopes for more stimulus from the
world's second-largest economy.
    The metal slid after data showed China's annual consumer
inflation rate quickened to a seven-month high of 2.5 percent in
December. Analysts said the data leaves the economy in a sweet
spot that calls for no change in interest rates. 
    "A pick-up in the Chinese inflation number has some people
thinking maybe the long-anticipated Chinese stimulus may not
(happen)", said Frank McGhee, head precious metals trader at
Integrated Brokerage Services LLC. 
    Bullion slipped below its 200-day moving average, failing to
hold the previous session's 1 percent gain.
    Spot gold was down 0.9 percent at $1,659.87 an ounce
by 3:12 p.m. EST (2012 GMT). 
    For the week, it gained 0.2 percent, lifted by better
physical demand in Asia and rallies in platinum group metals.
    U.S. COMEX gold futures for February delivery settled
down $17.40 an ounce at $1,660.60, with volume about 10 percent
above its 250-day average, preliminary Reuters data showed.
    Gold is down 1 percent so far this year after posting its
biggest quarterly decline in more than four years at the end of
2012. Gold's failure to rise on U.S. quantitative easing has
shaken investor confidence in the precious metal.
    John Hathaway, a respected portfolio manager for the
Tocqueville Gold Fund, said extreme levels of negative
sentiment have recently provided excellent entry points for new
bullish positions in the yellow metal and gold mining shares.
    A pick-up in physical gold buying in China ahead of the
Lunar New Year and uncertainty related to the U.S. debt-ceiling
crisis suggested gold prices will rebound in 2013, Barclays
strategists said in a Friday note.
    In Asia, Tokyo gold futures hit a record high as the
yen dropped to a 2-1/2-year low after the Japanese government
approved $117 billion of spending to revive the economy in the
biggest stimulus since the financial crisis. 
    Silver was down 1.4 percent at $30.38 an ounce.
    Platinum group metals, used in autocatalysts, are on track
for gains this week, outperforming gold. PGMs have been boosted
by improved U.S. auto sales data and a better economic outlook.
    Gold's premium over platinum, a historically unusual
phenomenon that has persisted since the first quarter of 2012,
fell to less than $40 an ounce on Friday, from around $140 at
the end of 2012. 
    Platinum was up 0.1 percent at $1,625.01 an ounce.
The white metal has risen more than 5 percent so far this year.
    Platinum benefited in the second half of 2012 from a deadly
wave of violence linked to industrial action in South Africa,
source of four out of five ounces of the world's platinum.
    Among other PGMs, palladium edged up 0.2 percent to
$697.70 an ounce. It gained 1.7 percent for the week.
 3:12 PM EST     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold FEB   1660.60 -17.40  -1.0  1653.10 1676.90  160,680
 US Silver MAR  30.408 -0.510  -1.6   30.150  30.940   41,229
 US Plat APR   1631.20  -3.10  -0.2  1616.30 1641.40   14,949
 US Pall MAR    701.45  -0.75  -0.1   689.30  704.65    3,421
 Gold          1659.87 -14.77  -0.9  1654.55 1676.44         
 Silver         30.380 -0.440  -1.4   30.220  30.900
 Platinum      1625.01   2.21   0.1  1617.50 1636.50
 Palladium      697.70   1.40   0.2   692.50  701.00
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        188,747   143,137   174,102     14.29    0.84
 US Silver       46,698    42,315    53,161     22.57    0.56
 US Platinum     15,043    14,313    10,594     17.26    0.17
 US Palladium     3,491     3,722     4,795                  

 (Additional reporting by Jan Harvey in London and Rujun Shen in
Singapore; Editing by David Gregorio and Dale Hudson)
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