PRECIOUS-Gold edges up as dollar drops, all eyes on Bernanke

Tue Jul 17, 2012 12:24am IST

* Gold up, dollar slips after weak retail sales data
    * Market awaits Bernanke two-day congressional testimony
Tuesday
    * Bullion in $150 range past three months
    * Coming up: U.S. consumer prices Tuesday

 (Recasts, adds details, updates market activity)
    By Frank Tang
    NEW YORK, July 16 (Reuters) - Gold edged up in quiet trading
on Monday as weak U.S. retail sales cut into the dollar's gains
ahead of Federal Reserve Chairman Ben Bernanke's Congressional
testimony which will provide the latest clue on U.S. monetary
policies.
    Bullion recovered from early losses as the dollar fell on
data showing U.S. retail sales fell for a third straight month
in June. as demand broadly slumped. Gold also was helped by the
International Monetary Fund on Monday cutting its global growth
forecast.  
    The rally in grains due to a severe drought in U.S. Midwest
 and crude oil's gains after news a U.S. Navy
vessel fired on a small boat in the Middle East added to gold's
investment appeal. 
    Trading volume was light as investors await Bernanke's two
days of testimony before Congress on Tuesday. A weak June
payrolls report and other signs the U.S. economy is slowing have
increased speculation the U.S. central bank will use monetary
policies to boost growth.
    "If he doesn't say anything against tightening, I believe
it's going to increase the likelihood of stimulus. The gold
market is going to attach itself to that and get appreciation,"
said Jeffrey Sica, chief investment officer of SICA Wealth which
manages over $1 billion in assets.
    Spot gold was up 0.2 percent at $1,592.69 an ounce by
2:09 p.m. EDT (1809 GMT).
    U.S. COMEX gold futures for August delivery settled
down 40 cents at $1,591.60 an ounce. Trading volume was around
30 percent below its 30-day average, preliminary Reuters data
showed.
    A quarterly Reuters poll showed gold experts have further
cut back price forecasts for the metal this year after a
sluggish first half, while gains in the dollar and a dearth of
physical demand are likely to clip any attempted return to last
September's record high for the rest of the year. 
  
    
    ALL EYES ON BERNANKE 
    A voting member of the Fed's policy-setting body, Dennis
Lockhart, said last week he had edged closer to supporting
another round of easing if the economy floundered. However,
another Fed official reiterated that there was no need for
additional Fed actions. 
    Gold prices have stayed in a relatively tight $150 range
between $1,525 and 1,67 for the last three months as the bullion
market awaited clearer direction on U.S. monetary policy.
    Further monetary easing would maintain pressure on long-term
interest rates, keeping the opportunity cost of holding gold at
rock bottom, as well as weighing on the dollar.
    "Right now, after the latest (Fed) meeting at the end of
June and the disappointment there, I'm not pricing in any QE3
factor before the U.S. elections," LGT Capital Management
analyst Bayram Dincer said.
    Among other precious metals, silver was up 0.4
percent at $27.40 an ounce. Platinum eased 0.5 percent at
$1,414.55 an ounce and palladium was down 0.2 percent at
$577.75 an ounce.
 2:09 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold AUG   1591.60  -0.40   0.0  1577.20 1594.60   86,953
 US Silver SEP  27.321 -0.048  -0.2   26.860  27.425   23,990
 US Plat OCT   1417.30 -17.90  -1.2  1414.80 1441.40    3,653
 US Pall SEP    577.85  -7.80  -1.3   575.50  586.00    1,759
                                                               
 Gold          1592.69   2.66   0.2  1579.20 1594.80         
 Silver         27.400  0.100   0.4   26.950  27.440
 Platinum      1414.55  -7.50  -0.5  1419.05 1435.00
 Palladium      577.75  -1.05  -0.2   578.25  584.00
                                                               
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        102,490   162,740   193,965     19.98    0.02
 US Silver       26,370    58,754    57,341     28.04   -2.93
 US Platinum      3,746    11,455     9,114        23    0.00
 US Palladium     1,771     3,201     4,622                  
                                                               
 

 (Additional reporting by Rujun Shen in Singapore; Editing by
Andrew Hay and Bob Burgdorfer)
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