January 30, 2009 / 10:59 AM / 10 years ago

PRECIOUS-Gold tips off 3-month high after U.S. data

* Q4 GDP data shows U.S. economy shrank less than expected

* Indian gold, euro-priced gold hit records

* Silver hits highest level since Oct 1

(Releads, updates prices, adds comment)

By Jan Harvey

LONDON, Jan 30 (Reuters) - Gold slipped from a three-month high on Friday after data showed the U.S. economy had contracted by less than expected in the fourth quarter, taking some of the heat out of safe-haven buying.

Spot gold XAU= climbed 2 percent to $926.90 an ounce, its highest since Oct 10. It was quoted at $918.90/920.90 an ounce at 1406 GMT, up from $906.75 in New York late on Thursday. In the immediate wake of the data it slipped to $916.60.

Gold priced in euros XAUEUR=R hit a record high of 720.53 euros.

“On first glance the (GDP) figures are generally good, so they should be negative for gold,” Calyon analyst Robin Bhar said. “Growth is better than expected, but deflation is also stronger, so it is a bit of a double whammy for gold.”

The U.S. Commerce Department said fourth-quarter gross domestic product fell at a 3.8 percent annual rate, the lowest pace since the first quarter of 1982. [ID:nN29308953]

Analysts had forecast GDP contracting 5.4 percent in the fourth quarter.

Gold is still being supported, however, by interest in the precious metal as a haven from risk.

U.S. gold futures for February delivery GCG9 on the COMEX division of the New York Mercantile Exchange were up $15.80 at $920.80 an ounce.

Market talk of China taking an interest in gold as an alternative to U.S. Treasuries, and of a European fund buying bullion, also helped support prices.

Gold has risen around 3 percent this week as investors have scrambled for the safety of gold and bullion-backed assets such as exchange-traded funds.

“The ETFs were up another 15 tonnes yesterday,” Simon Weeks, director of precious metals at the Bank of Nova Scotia, said, adding safe haven demand was driving the market.

The world’s biggest gold-backed ETF, New York’s SPDR Gold Trust (GLD), said its holdings jumped more than 10 tonnes on Thursday to a record 843.59 tonnes. [ID:nSP420252]

SPDR’s holdings have risen more than 63 tonnes or 8 percent since Dec 31.

European equity markets and U.S. stock index futures turned higher after the U.S. GDP data, showing a better appetite for assets such as stocks and shares. [ID:nN30347614]

The dollar also pared gains against the euro. A new wave of risk aversion hit the currency markets earlier on Friday, with the yen and dollar edging higher as investors worried about risk. [ID:nN30354292]

Although gold usually moves in the opposite direction to the dollar, the negative correlation between the two has broken down in recent weeks as both assets gained on risk aversion.

INDIAN GOLD HITS RECORD

Jewellery demand remains hamstrung by high prices. In India, the world’s biggest bullion market, gold futures touched an all-time high of 14,448 rupees per 10 grams, deterring buyers. [ID:nBOM427993]

Scrap sales are booming, however, as consumers cash in on the price rise.

Russia’s gold output rose by 13.3 percent to 184.49 tonnes last year, chiefly on the back of improving mine output, the Russian Gold Industrialists Union said. [ID:nLU746707]

Silver prices tracked gold, rising to a peak of $12.57 an ounce, their highest since Oct 1. It was later quoted at $12.44/12.50 an ounce against $12.31.

Silver ETFs have also risen sharply this year, with the largest, the iShares Silver Trust (SLV.A), up 660 tonnes or 10 percent in the year to date.

Among other precious metals, platinum and palladium were little changed. Platinum XPT= was at $980/985 an ounce against $972.50, while palladium XPD= was at $193/198 an ounce, against $191.50.

The world’s biggest palladium producer, Russia’s Norilsk Nickel (GMKN.MM), said its palladium output was 2.821 million ounces in 2008. It previously reported 2007 output at 3.113 million ounces. [ID:nLU256410]

A Reuters survey of 56 precious metals analysts and traders showed most expected the platinum group metals to post significant losses this year as the global economic slowdown pressures demand. [PREC/POLL]

Editing by Sue Thomas

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