PRECIOUS-Gold rises on surprise drop in US growth, Fed

Thu Jan 31, 2013 2:26am IST

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* U.S. 4th-qtr GDP down 0.1 pct, boosts gold buying
    * Fed says economic growth stalled, pullback likely
temporary
    * U.S. silver coins rise to all-time monthly high in January
    * Coming up: U.S. personal income, Core PCE index Thursday


    By Frank Tang
    NEW YORK, Jan 30 (Reuters) - Gold rose on Wednesday after
data showed the U.S. economy unexpectedly contracted in the
fourth quarter, and stayed higher as the Federal Reserve left in
place its bond-buying stimulus plan.
    The metal's inflation-hedge appeal received a boost after
the Fed in its January policy statement repeated a pledge to
keep buying securities until the outlook for employment
"improves substantially."
    The U.S. central bank also said that economic growth had
stalled but indicated the pullback was likely temporary.
 
    Gold was also bolstered by hopes that the Fed would keep its
monetary policy loose for a long time, after the Commerce
Department said gross domestic product fell at a 0.1 percent
annual rate, its weakest performance since it emerged from
recession in 2009. 
    "The market had extended gains ahead of the Fed on the
unexpected GDP number," said Frank McGhee, head precious metals
trader at Integrated Brokerage Services LLC.         
    "Most of what's in the Fed statement has already been baked
into the price, and that put a market susceptible for a
correction back to the downside," McGhee said.
    Spot gold was up 0.7 percent at $1,675.61 an ounce by
3:40 (2040 GMT), having risen as much as 1.1 percent to a
one-week high of $1,682.90 an ounce after the Fed Open Market
Committee (FOMC) statement. 
    U.S. COMEX gold futures for February delivery settled
up $19.10 at $1,679.90 an ounce, with trading volume about 25
percent above the 250-day average due to the February-April
rollover ahead of February's first-notice day Friday.
    Gold appears to be lifted by resurgent safe-haven demand as
U.S. equities dropped after the surprise drop in the GDP number.
 
    Silver rose 1.9 percent to $31.98 an ounce. 
    American Eagle silver coin sales in January surged to an
all-time monthly high as the U.S. Mint resumed sales after huge
demand triggered a brief suspension, while gold coins also
posted their best performance since July 2010. 
    
    NONFARM PAYROLLS EYED
    In the physical market, gold was supported after a top
Indian finance ministry official told Reuters the country does
not currently plan additional taxes or curbs on imports of gold
as it waits to see the impact of recent tax hikes.
 
    India along with China are the world's largest consumers of
physical bullion.
    Investors are also waiting for non farm payrolls data on
Friday for a close look at the U.S. labor market. Economists
surveyed by Reuters expect steady hiring from employers in
January. 
    Platinum group metals were mixed after their recent sharp
rallies.
    Platinum refiner specialist Johnson Matthey PLC 
said it saw no upturn in Europe and Japan for its catalytic
converter business in the new calendar year, but the weaker
markets should be mitigated by slightly more promising prospects
in North America. It also cited lower sales in its precious
metals unit for the third quarter. 
     Platinum rose 0.4 percent to $1,681.74, while
palladium eased 0.2 percent at $745.72, having hit a fresh
16-month high of $757.22 an ounce.
  
 3:40 PM EST     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHUG  CHUG                       VOLS
 US Gold FEB   1679.90  19.10   1.2  1661.80 1683.20   43,370
 US Silver MAR  32.177  0.993   3.2   31.250  32.300   53,289
 US Plat APER   1689.30  10.40   0.6  1678.70 1693.60    8,832
 US Pall MAR    751.40   1.65   0.2   744.90  760.50    8,128
                                                               
 Gold          1675.61  12.16   0.7  1663.35 1683.39         
 Silver         31.980  0.600   1.9   31.280  32.230
 Platinum      1681.74   6.50   0.4  1681.50 1688.49
 Palladium      745.72  -1.75  -0.2   745.27  757.22
                                                               
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D VGA  250D VGA   CURRENT     CHUG
 US Gold        228,845   163,437   171,939     13.66    0.19
 US Silver       59,134    42,928    51,835     20.27   -1.54
 US Platinum      8,988    19,419    10,966     16.44   -0.01
 US Palladium     8,852     3,570     4,668
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