May 27, 2013 / 3:41 AM / 6 years ago

PRECIOUS-Gold gains as equities slip, physical demand remains high

* Gold extends gains after best week in a month
    * Asian demand for physical gold remains high
    * Holdings at top gold ETF fall to new 4-year lows

 (Adds quotes, updates prices)
    By A. Ananthalakshmi
    SINGAPORE, May 27 (Reuters) - Gold rose on Monday,
benefiting from a shift in funds out of equities as concerns
over global economic growth lifted bullion's safe-haven appeal
and stretched its gains following its best week in a month.
    The recent fall in gold prices also kept physical demand for
the metal high in Asia with sellers struggling to keep pace with
orders. Gold prices remain around $150 cheaper compared to
levels just before a sell-off in mid-April.
    Spot gold was up 0.6 percent at $1,393.56 an ounce by
0752 GMT, after rising by 2 percent last week.
    Gold is still down nearly 17 percent this year, however,
after last month's rout pushed prices down to a two-year low of
$1,321.35.     
    "Since prices have been going down, we have seen almost 300
percent increase in sales," said Gregor Gregersen of Silver
Bullion Pte Ltd, a gold and silver dealer in Singapore. 
    Gregersen said dealers were facing difficulty meeting demand
as supplies were tight. 
    "Delivery times have become longer and longer to a point
where we are not selling certain products anymore until we can
get some supply." 
    Premiums for gold bars hit a record high in Asia amid the
tight supplies last week as lower spot prices attracted buyers,
mainly in China, the world's second biggest consumer of the
precious metal. 
    "Although the physical market has countered the negative
investment interest in part, we believe exchange-traded product
outflows are set to continue unabated," Barclays analyst Suki
Cooper wrote in a note. 
    Holdings in SPDR Gold Trust, the world's largest
gold-backed exchange-traded fund, fell 0.24 percent to 1016.16
tonnes on Friday, their lowest in more than four years.
 
    Apart from persistent ETF outflows, indications that the
Federal Reserve may slow its bullion-friendly bond purchases as
the U.S. economy gains momentum were also likely to cap gold's
gains.
    Federal Reserve Chairman Ben Bernanke last week raised the
possibility of gradually reducing the U.S. central bank's
$85-billion monthly bond purchases if the labour market improved
in a sustainable way, and warned of risks to holding interest
rates too low for too long. 
    U.S. gold rose 0.43 percent to $1,392.50, while
silver, platinum and palladium tracked gold
higher.
    Asian stocks got off to a shaky start this week, with
Japan's Nikkei falling more than 3 percent as investors worried
that a bout of profit-taking had turned into lasting doubts
about economic growth and broader appetite for risk. 
    
  Precious metals prices 0752 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1393.56    8.01   +0.58    -16.78
  Spot Silver        22.65    0.27   +1.21    -25.20
  Spot Platinum    1459.49    9.49   +0.65     -4.92
  Spot Palladium    729.22    4.72   +0.65      5.38
  COMEX GOLD JUN3  1392.50    5.90   +0.43    -16.91        14812
  COMEX SILVER JUL3  0.23    0.00   +0.57    -99.25         3395
  Euro/Dollar       1.2942
  Dollar/Yen        101.00
 
  COMEX gold and silver contracts show the most active months
   

 (Reporting by A. Ananthalakshmi; Editing by Clarence Fernandez
and Tom Hogue)
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