April 25, 2013 / 4:25 AM / 5 years ago

PRECIOUS-Gold rises to 1-week high, central bank purchases support

* Russia, Turkey raised gold reserves in March
    * Gold to climb to $1,469 -technicals 
    * Coming up: U.S. Weekly jobless claims at 1230 GMT

 (Updates prices, adds quotes)
    By Lewa Pardomuan
    SINGAPORE, April 25 (Reuters) - Gold climbed to its highest
in more than a week on Thursday, boosted by prospects of more
central bank buying after a recent steep sell-off in the
precious metal, while a firmer euro also underpinned prices.
    Central bank purchases and surging physical demand helped
gold bounce from a two-year trough around $1,321 an ounce hit
last week, dealers said. But daily outflows from exchange-traded
funds, reflecting sagging investor confidence, capped gains.
    Russia and Turkey raised their gold reserves in March, the
International Monetary Fund said on Wednesday, increasing their
holdings ahead of the spectacular plunge in prices this month
that shocked ardent gold investors and bulls. 
    Gold reversed early losses and stood at $1,445.56 an
ounce by 0621 GMT, up $14.76. It hit a high of $1,447.66 an
ounce earlier in the session, its loftiest since April 15 -- the
day it posted its biggest ever daily drop in dollar terms. 
    "If the price breaks above $1,447-$1,450 levels, there will
be more upward momentum. If it doesn't, we may see a further dip
in gold prices," said Joyce Liu, an investment analyst at
Phillip Futures in Singapore.
    Bullion is torn between a rise in demand for jewellery and
coins, and investors in ETFs cutting exposure as they became
increasingly convinced the U.S. Federal Reserve will look to end
its bullion-friendly bond-buying programme by the end of 2013 or
beginning of 2014.
    Holdings of the largest gold-backed ETF, New York's SPDR
Gold Trust, dropped 0.38 percent on Wednesday from
Tuesday, their lowest since late 2009. 
    Premiums for gold bars soared to multi-year highs in Asia
after a spate of physical buying ran down supplies, with dealers
in top consumer India expecting a surge in imports this month.
   Dealers also noted an increase in buying interest in
second-largest consumer China, keeping premiums in Hong Kong at
their highest level since October 2011 at up to $3 an ounce to
spot London prices.
     "Strong physical buying in China is overflowing into Hong
Kong. I heard if you have gold bars now, people will buy them at
$2.50 to $3.00 premiums," said a dealer in Singapore.
   The former British colony is the centre for bullion trading
in East Asia and China's main source for gold imports.
XAU-HK-PREM 
     U.S. gold for June delivery rose more than 1
percent to as high as $1,447.50, its highest since April 15, but
some dealers cautioned the current rebound in cash and gold
futures was far from sustainable.
    
    
    "Physical buying has been strong but the question is where
are these buyers are coming from? There could be a fundamental
shift from commercial buying of paper assets into physical gold.
If that's the case, gold prices may continue to go up," said Liu
at Phillip Futures.
    "But then I suspect, it's most likely the buyers are retail
investors who don't know much about gold's personality and
behaviour. If that's the case, how long can this physical buying
sustain?"
     In other markets, the euro bounced back against the dollar,
making dollar-prices gold cheaper for holders of other
currencies, while shares edged higher on views the recent run of
weak global economic data will encourage major central banks to
keep or deepen their monetary stimulus. 
    
  Precious metals prices 0621 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1445.56   14.76   +1.03    -13.67
  Spot Silver        23.22    0.13   +0.56    -23.32
  Spot Platinum    1436.74   10.74   +0.75     -6.40
  Spot Palladium    671.75    6.25   +0.94     -2.93
  COMEX GOLD JUN3  1445.00   21.30   +1.50    -13.77        31310
  COMEX SILVER MAY3  23.20    0.36   +1.59    -23.27        11054
  Euro/Dollar       1.3038
  Dollar/Yen         99.12
 
        

 (Editing by Himani Sarkar and Joseph Radford)

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