PRECIOUS-Gold flat as Greek aid stalling, MidEast truce eyed

Thu Nov 22, 2012 1:15am IST

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* Failure to reach Greek aid deal keeps gold under pressure
    * Gold volatility drop could chase momentum traders
    * Brazil, Kazakhstan and Turkey raise gold holdings - IMF
    * Coming up: U.S. markets shut on Thanksgiving holiday Thurs


    By Frank Tang
    NEW YORK, Nov 21 (Reuters) - Gold was little changed on
Wednesday after trading in a narrow range, caught between
recession worries in Europe and the United States and safe-haven
bids over concerns about violence in the Middle East.
    Bullion ended near the top of an $11 daily range as the
failure of international lenders to reach a deal to release
emergency aid for Greece for a second week. 
    While gold is sometimes viewed as a safe haven in times of
financial chaos, most investors used the metal as a hedge
against inflation and central-bank money printing. Therefore,
the disagreement on a Greek financial bailout decreased the
metal's inflation-hedge appeal.
    The metal was under pressure from data that showed U.S.
consumer sentiment inched up, but appeared to be stalling after
several months of improvement. Uncertainty also grew over a
combination of tax hikes and spending cuts that may come into
effect early next year in the United States. 
    Gold looked set to settle into a trading range above $1,700
an ounce after it had risen near its 50-day moving average at
$1,741 an ounce several times in the past two weeks.
    "Unless people see something is going to happen, they are
going to get out of gold. A lot of the trading is leveraged
trading in futures, and many people don't want to sit around and
take big risks," said Miguel Perez-Santalla, a vice president of
physical gold dealer BullionVault.   
    Spot gold inched up 0.1 percent to $1,728.94 an ounce
by 2:03 p.m. EST (1903 GMT).
    U.S. COMEX gold futures settled up $4.60 at
$1,728.20, with trading volume over 150,000 lots in line with
its 30-day average, preliminary Reuters data showed.
    Implied volatility, a crucial component for an options price
measuring the perceived risk of future movement of gold futures,
has dropped to around 13 and is at a six-year-low.
    Low-price volatility could prompt momentum traders to look
at other markets and to sell in gold, analysts said.
    Underpinning gold is tensions in the Middle East even after
Israel and the Islamist Hamas movement agreed to an
Egyptian-sponsored ceasefire around the Gaza Strip that has
killed more than 140 Palestinians and five Israelis.
 
    Analysts expect gold to trade within a narrow range for the
rest of the week because some trading desks have already shut
before the U.S. Thanksgiving holiday on Thursday. The CME COMEX/
 NYMEX floors and the Globex electronic platform will close
early on Friday.
    Silver climbed 0.5 percent to $33.33 an ounce.  
    
    CENTRAL BANK GOLD RESERVES
    News that Brazil, Kazakhstan and Turkey had raised their
gold holdings also supported bullion. Renewed interest in gold
among central banks amid global financial uncertainty has been a
key driver to gold prices in recent years. 
    Worries over recession due to tax hikes and spending cuts
next year could still weigh on gold. On Tuesday, Federal Reserve
Chairman Ben Bernanke indicated the Fed did 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."
    Platinum group metals ignored news that Johnson Matthey
, the world's largest maker of catalysts to control car
emissions, posted a dip in profits as worries over an outlook
dented by lower PGM prices, a volatile U.S. truck market and
weakness in Europe sent its shares lower. 
    Platinum was up 0.5 percent to $1,576.49, while
palladium rose 2.1 percent to $646.72.
    
 2:03 PM EST     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold DEC   1728.20   4.60   0.3  1718.40 1732.00  116,410
 US Silver DEC   33.35  0.420   1.3   32.825  33.395   36,727
 US Plat JAN   1583.90  10.90   0.7  1567.10 1584.60    5,515
 US Pall DEC    651.30  12.95   2.0   631.10  654.30    4,780
                                                               
 Gold          1728.94   0.90   0.1  1721.50 1731.50         
 Silver         33.330  0.170   0.5   32.890  33.390
 Platinum      1576.49   7.24   0.5  1568.00 1580.00
 Palladium      646.72  13.50   2.1   634.52  652.00
                                                               
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        152,734   155,022   175,871     12.71   -0.20
 US Silver       52,655    45,813    56,169     20.09   -0.94
 US Platinum      5,879     8,957     9,481     18.14   -0.23
 US Palladium     6,361     4,169     4,579
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