PRECIOUS-Gold reverses losses on equity;econ concerns stay

Tue Oct 30, 2012 12:55pm IST

* Gold signals still mixed -technicals 
    * Coming Up: U.S. ICSC weekly chain store sales; 1145 GMT

 (Updates prices, adds quotes)
    By Lewa Pardomuan
    SINGAPORE, Oct 30 (Reuters) - Gold tracked equities higher
on Tuesday, but was heading for its biggest monthly loss since
May, after disappointing corporate earnings prompted investors
to sell holdings to cover losses in other markets hurt by global
economic uncertainty.
    The focus this week will be on Friday's U.S. non-farm
payrolls report, which could shed light on the nascent labour
market recovery and influence an increasingly tight election
between Democratic President Barack Obama and Republican
challenger Mitt Romney. 
    Sandy, one of the biggest storms ever to hit the United
States, has had no impact on trading in Asia, but the closure of
 markets in the United States could curb volume and increase
volatility. 
    Gold hit a low around $1,704 an ounce and was at
$1,711.70 by 0713 GMT, up $2.46. It hit an 11-month high above
$1,795 in early October after the U.S. Federal Reserve announced
its third round of aggressive economic stimulus in September. 
    "It isn't much of a surprise that it is still moving within
this trading band. People are more cautious in view of the U.S.
elections and the euro problems," said Brian Lan, managing
director of GoldSilver Central Pte Ltd in Singapore.
    "Some of the support for this price level, I believe, comes
from India, as Diwali is coming up. $1,700 is not a very strong
support. Once it's broken, we expect to see the support level at
$1,675," said Lan, who pegged resistance at $1,720.
    The festive season in main gold consumer India peaks in
November with Diwali, the Hindu festival of lights. Weddings
also take place at this time, with gold jewellery forming a key
part of the dowry daughters receive from their parents. 
    U.S. gold for December rose $3.90 to $1,712.60 an
ounce.      
    
    
    
    Shares in Asia rose modestly but momentum was curtailed by
the powerful storm that will keep U.S. markets shut, while the
U.S. dollar slid to an intraday low against the yen after the
Bank of Japan unveiled further easing steps. 
    "A further round of quantitative easing by the BOJ, in
addition to possible weakness in the yen, may allow for $10 to
$15 an ounce upside to the price today, in our view," Deutsche
Bank said in a report. 
    "Nevertheless, we believe that such support is likely to be
ephemeral, with renewed pressure likely as we move through
November. We continue to see $1,700 an ounce as an important
support level." 
    The euro was stuck in its recent range, but pressured
by political jitters in debt-laden Italy and an uncertain
bailout outlook for struggling Spain and Greece. 
    U.S. economic growth picked up slightly more than expected
in the third quarter, data showed on Friday, though global
giants Apple and Amazon, European car maker
Renault and electronics group Ericsson all
posted results that fell short of expectations. 
    "Whilst last week's Fed meeting took place without new
insights or reactions, the presidential elections in the U.S.
early in November are moving more and more to the fore. We
expect markets to be volatile until then and without clear
direction," trading house Heraeus said in a report.
    "Should Mitt Romney win, the attitude towards monetary
measures is at any rate likely to change: he is not exactly
known for being a friend of Bernanke nor the Fed's quantitative
easing programme. In the short term, we still expect that
falling below $1,700 an ounce would fuel fresh purchases."
    Bullish bets on U.S. commodities by hedge funds and other
big speculators have fallen to a near 2-1/2-month low, trade
data showed on Friday, as oil and gold saw heavy selling for a
second straight week. 
    Uncertainty over global economic recovery and questions on
the future of U.S. monetary policy, which has been ultra-loose
under Fed Chairman Ben Bernanke, was weighing on gold's appeal
as an inflation hedge.
       
  Precious metals prices 0713 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1711.70    2.46   +0.14      9.46
  Spot Silver        31.89    0.13   +0.41     15.17
  Spot Platinum    1536.24    6.24   +0.41     10.28
  Spot Palladium    588.47    2.57   +0.44     -9.81
  COMEX GOLD DEC2  1712.60    3.90   +0.23      9.31        16454
  COMEX SILVER DEC2  31.94    0.19   +0.60     14.40         3544
  Euro/Dollar       1.2937
  Dollar/Yen         79.48
 
  COMEX gold and silver contracts show the most active months
 
 (Editing by Clarence Fernandez)
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