PRECIOUS-Gold falls to 1-week low on global recession fears

Fri Nov 16, 2012 1:56am IST

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Stocks

   

* Recession in Europe, signs of US slowdown, fiscal crisis
weigh
    * Trade report shows world gold demand slides, seen
weakening
    * Paulson held onto huge gold stake in third quarter
    * Coming up: U.S. net capital inflows, industrial output
Fri.


    By Frank Tang
    NEW YORK, Nov 15 (Reuters) - Gold prices dropped to a
one-week low in heavy trade on Thursday as worries about an
economic slowdown in Europe and fear of a recession in the
United States hit bullion's inflation-hedge appeal.
    Lackluster global equities that fell for a seventh day in a
row combined with data showing the euro zone entered a recession
in the third quarter dragged the precious metal lower. Fear that
the United States could lapse into recession if a combination of
scheduled tax hikes and spending cuts is allowed to go forward
also weighed on gold's price.
    "Uncertainty surrounding the 'fiscal cliff' continues to
pressure gold, as increased taxation implies a more austere
government," said Jeffrey Sherman, commodities portfolio manager
at DoubleLine Capital which has $50 billion in assets under
management.
    Gold fell as Federal Reserve Chairman Ben Bernanke, in a
speech, said the improving U.S. housing market is "far from
being out of the woods." A surge in new jobless claims and
weakened factory activity after Superstorm Sandy also pressured
the metal. 
    Spot gold fell 0.7 percent to $1,713.99 by 2:32 PM
EST (1932 GMT), partially recovering after hitting a one-week
low of $1,704.69.
    Losses in gold, however, were limited by safe-haven bids
after two rockets fired from the Gaza Strip targeted Tel Aviv on
Thursday in the first attack on Israel's commercial capital in
20 years, raising the stakes in a showdown between Israel and
the Palestinians that is moving towards all-out war.
 
    U.S. COMEX gold futures for December delivery settled
 down $16.30 an ounce at $1,713.80.
    Trading volume was on track to top 200,000 lots, their
highest in more than a week and about 15 percent above the
250-day average, preliminary Reuters data showed.
    Silver dropped 0.6 percent to $32.38 an ounce. 

    GOLD DEMAND SEEN DOWN FURTHER
    Analysts cited gold's early sharp losses to a report from
trade group World Gold Council showing that global gold demand
dropped 11 percent in the third quarter from record levels in
the same period last year, hurt by lackluster physical buying
top consumers China and India. 
    The WGC's managing director for investment, Marcus Grubb,
told the Reuters Global Gold Forum that he expected full-year
buying to be lower than in 2011 though prices would hold firm.
    The gold market largely ignored news prominent hedge fund
manager John Paulson kept a major stake in gold in the third
quarter of 2012. 
    Analysts read the third-quarter regulatory filing by Paulson
as a sign that the manager, who found fame and fortune on a bet
against the U.S. housing market in 2007 and also a well-known
gold bull, has not lost his faith in the precious metal as a
long hedge against inflation.
    Among platinum group metals, platinum dropped 1
percent to $1,567.49, while palladium eased 12 cents at
$603.80.
 2:32 PM EST     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold DEC   1713.80 -16.30  -0.9  1704.50 1727.90  163,218
 US Silver DEC  32.674 -0.206  -0.6   32.150  32.775   51,472
 US Plat JAN   1573.30 -18.30  -1.1  1563.00 1589.10    7,197
 US Pall DEC    631.20 -10.35  -1.6   628.00  642.35    5,319
                                                               
 Gold          1713.99 -12.06  -0.7  1704.69 1727.35         
 Silver         32.380 -0.200  -0.6   32.200  32.760
 Platinum      1567.49 -15.50  -1.0  1564.00 1587.50
 Palladium      603.80  -0.12   0.0   630.20  640.00
                                                               
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        192,457   152,190   176,556     14.62   -0.61
 US Silver       65,571    43,264    56,069     23.45    0.04
 US Platinum      7,351     8,762     9,480     18.29    0.04
 US Palladium     6,320     3,623     4,527
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