PRECIOUS-Gold posts second weekly loss on economic hopes

Sat Feb 23, 2013 3:59am IST

* Gold ends up Friday after sell-off earlier in week
    * Better U.S. equities performance dents safe-haven appeal
    * SPDR gold ETF set for biggest weekly outflow in 18 months
    * Coming up: Chicago, Dallas manufacturing indexes Monday

 (Adds market details, updates prices)
    By Frank Tang
    NEW YORK, Feb 22 (Reuters) - Gold edged up on Friday, but
notched a second consecutive weekly loss, as a better U.S.
economic outlook and indications the Federal Reserve may end its
stimulus program prompted investors to buy riskier assets such
as equities.
    With a lack of key U.S. economic data on Friday, bullion
investors continued to digested the minutes from the Fed's Open
Market Committee (FOMC) meeting in January that suggested
stimulus measures may end earlier than first thought.
 
    Improving global market confidence and a Wall Street rally
also hit gold's traditional safe-haven appeal.
    "A lot of money is rotating out of gold and into the
equities," said Zachary Oxman, portfolio manager of TrendMax
Futures.
    Friday's CFTC Commitments of Traders showed managed money
cut their gold futures and options net length to their lowest
since November 2008, a sign that some heavy-weight investors may
add positions again, dealers said. 
    Spot gold was up 0.3 percent to $1,579.91 an ounce by
4:26 p.m. EST (2126 GMT), posting a weekly decline of nearly 2
percent.
    U.S. gold futures for April delivery settled down
$5.80 at $1,572.80, with trading volume about 30 percent below
its 250-day average, preliminary Reuters data showed. 
    U.S. benchmark index S&P 500 was up 6 percent year to
date and managed to hold above 1,500 points despite ending the
week slightly down. 
    Confidence in gold, however, was fragile after the metal
fell to a seven-month low of $1,554.49 Thursday a day after the
FOMC minutes and rumors of forced liquidation by a troubled
commodity fund earlier in the week. 
    Gold looked vulnerable on technical charts after it formed a
bearish formation earlier in the week known as a "death cross,"
when its 50-day moving average broke below its 200-day moving
average. 
    
    ETF HOLDINGS, U.S. SPENDING CUTS EYED
    Investors continued to bail out of SPDR Gold Trust 
this week. The world's largest gold-backed, exchange-traded fund
posted its biggest weekly outflow since August 2011.
 
    The strength of exchange-traded products will remain an
essential element to gold prices, said Suki Cooper, precious
metals strategist at Barclays Capital.
    Cooper said that bullion investors will also take trading
cues from U.S. debt-related news. Massive across-the-board U.S.
federal spending cuts are set to kick in on March 1 if
policymakers fail to agree on an alternative option.
    Among other precious metals, silver was up 0.2
percent to $28.70 an ounce. 
    Platinum group metals also ended sharply off Thursday's
lows.
    Platinum fell 0.5 percent to $1,602.75 an ounce,
after prices fell to a five-week low of $1,593.45 in the
previous session. Palladium rose 0.9 percent at $735.22
an ounce, having fallen to a one-month low of $707.22 on
Thursday.
 
 4:26 PM EST     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold APR   1572.80  -5.80  -0.4  1569.30 1587.00  127,837
 US Silver MAR   28.46 -0.239  -0.8   28.335  28.895   40,555
 US Plat APR   1607.40 -12.60  -0.8  1604.40 1631.60   10,474
 US Pall MAR    735.30   1.70   0.2   728.40  741.30    7,323
                                                               
 Gold          1579.91   4.25   0.3  1570.53 1586.85         
 Silver         28.700  0.060   0.2   28.400  28.920
 Platinum      1602.75  -7.99  -0.5  1606.75 1629.00
 Palladium      735.22   6.75   0.9   730.77  739.00
                                                               
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        136,794   196,771   172,896     15.69    0.06
 US Silver       54,406    56,425    52,895     24.28   -0.86
 US Platinum     10,584    14,251    11,239     17.08    0.58
 US Palladium    12,290     6,546     4,860                  
                                                               
       

 (Additional reporting by Clara Denina and Jan Harvey; editing
by Jim Marshall and Leslie Gevirtz)
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