April 17, 2013 / 10:50 AM / 5 years ago

PRECIOUS-Gold up on physical buying but seen vulnerable

* Asian demand for gold bars, coins lifts spot prices
    * SPDR holdings fall 0.7 percent on Tuesday
    * Cyprus gold sales within next months


    By Frank Tang and Clara Denina 
    NEW YORK/LONDON, April 17 (Reuters) - Gold rose in choppy
trade on Wednesday as the two-year low it hit the previous
session triggered Asian physical buying, but the market had
trouble holding on to gains and is seen vulnerable to further
sell-offs.
    Bullion was sharply off its earlier high as economic worries
roiled global markets. Sharp losses in U.S. equities and
industrial commodities led by copper and crude oil continued to
weigh on gold, a traditional inflation hedge.
    Sentiment among gold investors remains shaken as bullion's
historic selloff prompted markets to assess the damage to the
metal's status as safe haven.
    There were signs of improving physical demand from Asia,
especially India, historically the world's largest bullion
consumer. In addition, coin investors sought out potential
bargains at sharply lower prices after gold's sell-off.
    "We are seeing a lot of retail buying and not a lot of
commercial and certainly not fund buying in this particular
rally back," said Frank McGhee, head precious metals trader of
Integrated Brokerage Services LLC. 
    "Investors are still very wary about economic slowdown and
deflation," McGhee said.
    Spot gold was up 0.5 percent at $1,373.96 an ounce by
2:04 PM EDT (1804 GMT), having tumbled to its lowest since
January 2011 at $1,321.35 on Tuesday. 
    The market fell by a combined $225 on Friday and Monday,
which compares with a total trading range of $260 in 2012.
    It is down about 18 percent so far this year, at risk of
posting its first annual loss after 12 consecutive years of
gains.
    Asian physical buying pushed up premiums for gold bars in
Singapore to their highest in 18 months at $1.70 an ounce to
spot London prices. 
    India celebrates major gold-buying festival Akshaya Tritiya
next month, and the wedding season will continue until early
June.
    U.S. Comex June gold futures settled down $4.70 at
$1,382.70 an ounce. Turnover was heavy as trading volume has
exceeded its 30-day average, preliminary Reuters data showed.
    
    CYPRUS GOLD SALES WEIGH
    Worries are also festering that other indebted euro zone
countries could follow Cyprus in selling bullion reserves to
raise cash after the island's finance minister Harris Georgiades
expected a sale within the next few months. 
    Investors continued to exit holdings of exchange-traded
funds, with holdings in the world's largest gold-backed fund
SPDR Gold Trust falling 0.73 percent to 1,145.92 tonnes on
Tuesday from 1,154.34 tonnes on Monday. 
    Holdings of global gold ETFs are currently at their lowest
since late 2011.. 
    Among other precious metals, platinum and palladium
 fell on news that demand for new cars in the European
Union declined for the 18th consecutive month in March, down
10.2 percent to 1.3 million. 
    Spot platinum fell 1 percent to $1,428.49 an ounce, having
touched its lowest since last August in the previous session.
Palladium was down 2.7 percent to $658.97.
    Silver edged down 0.6 percent to $23.22 an ounce.
 2:04 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold JUN   1382.70  -4.70  -0.3  1365.00 1395.20  213,752
 US Silver MAY  23.307 -0.321  -1.4   22.835  23.725   76,439
 US Plat JUL   1435.40 -15.20  -1.0  1422.50 1452.80    9,368
 US Pall JUN    661.40 -16.80  -2.5   658.25  683.35    4,738
                                                               
 Gold          1373.96   6.17   0.5  1365.93 1394.60         
 Silver         23.220 -0.150  -0.6   22.900  23.720
 Platinum      1428.49 -15.01  -1.0  1424.75 1448.75
 Palladium      658.97 -18.53  -2.7   661.25  679.75
                                                               
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        226,317   210,730   176,556     23.87    0.80
 US Silver      106,002    54,248    53,527     37.98   -9.26
 US Platinum      9,442    15,754    12,020     21.34    1.81
 US Palladium     4,870     5,119     5,307

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