PRECIOUS-Gold down on Gaza ceasefire hope, Bernanke comments

Wed Nov 21, 2012 2:54am IST

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* Possible ease in Mideast tensions, crude tumble weigh
    * Bernanke: Fed has no tools to offset fiscal crisis damage
    * India asks banks to restrict financing of gold buys
    * Coming up: U.S. initial jobless claims Wednesday


    By Frank Tang
    NEW YORK, Nov 20 (Reuters) - Gold fell on Tuesday as a
combination of tumbling crude prices, hopes for a Gaza ceasefire
between Israel and Hamas, and Federal Reserve Chairman Ben
Bernanke's comments on the fiscal crisis diminished bullion's
appeal as an inflation hedge.
    After holding steady early in the session, gold began to
weaken as Brent crude futures accelerated losses on indications
that a truce was near in the Gaza conflict, although the market
was still awaiting confirmation from all sides. 
    Gold also came under pressure after Bernanke, in comments
before the Economic Club of New York, said the Fed does not have
the tools to offset the damage that would result if politicians
fail to strike a deal to prevent going over the "fiscal cliff." 
    A recent decline in bullish bets held by money managers
according to the CFTC data will likely continue to weigh on
gold, analysts said.
    "There has been a substantial reduction in fund
participation. We may be in a trading-range type market with
weak oil, copper and platinum," said Bill O'Neill, a partner in
commodities investment firm LOGIC Advisors.
    Spot gold was down 0.2 percent at $1,727.50 an ounce
by 4:17 p.m. EST (2117 GMT). 
    Some investors also opted to take profits and close out
their positions after Monday's 1 percent gain in a shortened
trading week due to the U.S. Thanksgiving holiday on Thursday.
    U.S. COMEX gold futures for December delivery settled
down $10.80 at $1,723.60 an ounce, with trading volume about 30
percent below its 250-day average, preliminary Reuters data
showed.    
   Bernanke repeated a warning that failing to halt $600 billion
in expiring tax cuts and government spending reductions could
lead to recession, and said worries over how budget negotiations
will be resolved were already damaging growth. 
    The metal largely ignored earlier news that Moody's stripped
France of its prized triple-A badge, cutting the sovereign
credit rating on Europe's No. 2 economy by one notch to Aa1 from
Aaa, citing an uncertain fiscal outlook and deteriorating
economy. 
    
    DIGESTING INDIAN GOLD BAN
    Traders were digesting news Indian banks have been asked by
the Reserve Bank of India to restrict financing of purchases of
gold in the form of bullion, jewelry and coins or units of
exchange traded funds, in the latest measure to restrict gold
imports to counter a ballooning fiscal deficit. 
    India and China are by far the two largest consumers of
physical gold bullion.
    Spot silver fell 0.2 percent to $33.15 an ounce.    
    Industrial demand for silver should rise in both 2013 and
2014, due to improving outlooks for the auto industry and the
manufacturing sector, GFMS, a metals research firm and Thomson
Reuters unit, said on Tuesday. 
    GFMS, however, forecast a 6 percent decline in silver
industrial demand this year.
    Platinum group metals outperformed gold on Tuesday. Platinum
 rose 0.1 percent to $1,572.75, while palladium 
eased 0.4 percent to $634.47.
 4:17 PM EST     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold DEC   1723.60 -10.80  -0.6  1721.80 1736.00  115,792
 US Silver DEC   32.93 -0.259  -0.8   32.860  33.260   42,757
 US Plat JAN   1573.00 -10.80  -0.7  1569.80 1585.80    5,168
 US Pall DEC    638.35  -6.95  -1.1   635.45  644.00    3,476
                                                               
 Gold          1727.50  -3.95  -0.2  1722.68 1735.20         
 Silver         33.150  0.050   0.2   32.890  33.240
 Platinum      1572.75   1.95   0.1  1571.25 1580.75
 Palladium      634.47  -2.53  -0.4   638.50  642.00
                                                               
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        138,879   155,022   175,871     12.71   -0.20
 US Silver       59,013    45,813    56,126     21.03   -0.77
 US Platinum      5,321     8,957     9,478     18.37   -0.51
 US Palladium     4,443     4,169     4,573
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