September 30, 2013 / 1:07 PM / 5 years ago

PRECIOUS-Gold posts best quarter in a year, safe haven bids weak

* Gold posts 7.7 pct gain in Q3 after dismal Q2
    * Safe-haven bids absent despite possible US govt shutdown
    * LBMA chief hints at charging more for gold forward rates
    * Coming up: U.S. govt shutdown deadline Monday midnight

 (Adds trader comment, second byline, dateline, updates market
    By Frank Tang and Veronica Brown
    NEW YORK/LONDON, Sept 30 (Reuters) - Gold prices on Monday
posted their best quarterly performance in a year, despite weak
safe-haven buying amid uncertainty over a looming U.S.
government shutdown.
    Bullion gained nearly 8 percent for the third quarter,
thanks to a sharp rebound rally following a record 23 percent
drop in the previous quarter in which it posted a $225 two-day
drop in mid April. It was also gold's first quarterly rise since
the third quarter of 2012.
    Some market watchers, however, said gold's failure to rally
further in spite of political turmoil in Syria and the U.S.
Federal Reserve's keeping its monetary stimulus suggested the
precious metal is losing momentum.
    Gold fell on Monday as the U.S. Congress, still in partisan
deadlock over Republican efforts to halt President Barack
Obama's healthcare reforms, was on the verge of shutting down
most of the U.S. government starting on Tuesday morning.
    "While this is chaotic and nerve wrecking, the market is
thinking it's not something that will go on for an extended
period of time and to have a real material impact," said Bill
O'Neill, partner of commodities investment firm LOGIC Advisors.
    Spot gold was down 0.5 percent at $1,328.74 an ounce
by 2:42 p.m. EDT (1842 GMT). 
    U.S. Comex gold futures for December delivery settled
down $12.20 at $1,327 an ounce.
    Despite the looming U.S. budge crisis, gold futures trading
activity was thin, with volume about 30 percent below its 30-day
moving average, preliminary Reuters data showed.
    Extreme fears due to the U.S. budget crisis in 2011 helped
power gold to its record high at above $1,920 an ounce in
September 2011.
    The U.S. Mint, which produces the American Eagle bullion
gold and silver coins for investors, is not expected to be
affected by any potential government shutdown because its
funding does not rely on appropriations by the U.S. Congress. 

    Despite its quarterly gains, gold is still down 20 percent
for the year, weighed down by expectations the Fed is planning
to taper its massive $85 billion monthly bond purchase.
    At its September meeting, the Fed stuck with its bond-buying
stimulus program, surprising markets which had expected a small
reduction from this month. 
    The Fed meets next on Oct. 29-30.
    "It seems to us that the central bank will likely stand pat
again, perhaps not wanting to take two completely different
directional views on rate policy in the span of just 30 days,"
INTL FCStone analyst Edward Meir said in a note. 
    In physical market news, the London Bullion Market
Association could charge its member banks more or even disband
its Gold Forward Offered Rates (GOFO) after a string of new
financial regulations, the chairman of the industry body told
Reuters at the annual LBMA conference on Sunday. 
    Among other precious metals, silver was down 0.3 percent at
$21.67 per ounce, while platinum fell 0.9 percent
to $1,401.06 and palladium dropped 0.9 percent to
 2:42 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold DEC   1327.00 -12.20  -0.9  1322.00 1353.80  108,843
 US Silver DEC  21.708 -0.123  -0.6   21.435  22.110   31,313
 US Plat OCT   1408.10  -6.80  -0.5  1399.20 1430.90      884
 US Pall DEC    727.15  -4.65  -0.6   723.00  735.00    2,658
 Gold          1328.74  -6.97  -0.5  1323.75 1343.61         
 Silver         21.670 -0.060  -0.3   21.450  22.030
 Platinum      1401.06 -12.04  -0.9  1406.00 1422.74
 Palladium      721.75  -6.25  -0.9   725.31  731.50
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        114,144   163,003   189,282     24.28    2.30
 US Silver       32,893    61,059    62,024     32.18   -0.47
 US Platinum     10,365    13,862    13,285     19.13   -1.03
 US Palladium     2,695     6,349     5,817                  

 (Additional reporting by Freya Berry in London and
A.Ananthalakshmi in Singapore; Editing by Jason Neely, Jane
Baird and Marguerita Choy)
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