PRECIOUS-Gold up on volatile currency moves but weakness seen

Wed Apr 10, 2013 1:50am IST

* Dollar falls sharply against major currencies
    * Worries about massive Japanese stimulus lift gold
    * Hong Kong net gold flow to mainland China rebounds
    * Coming up: U.S. March Fed policy meeting minutes Wednesday

 (Updates with new comment, market activity)
    By Frank Tang
    NEW YORK, April 9 (Reuters) - Gold rose on Tuesday as
volatility in the currency market triggered by Japan's
aggressive monetary easing plan lifted bullion's appeal as a
hedge against inflation and currency fluctuations.
    Silver, often more volatile and speculative than
gold, rose 2.5 percent for its biggest one-day gain in five
months.
    Bullion climbed to a one-week high as the dollar fell
against the euro and the yen, with the Japanese currency
recovering from a four-year low set against the greenback
earlier in the session. 
    Analysts said pent-up buying boosted gold after it largely
failed to rally after the Bank of Japan pledged last Thursday to
inject about $1.4 trillion into the economy over two years. The
metal ended the week down 1 percent.
    Gold's recent weak performance in light of the Cyprus
banking crisis and signs of a continuation of the Federal
Reserve's monetary stimulus, however, suggested the metal is
vulnerable to further selling.
    "We don't have a resolution yet as to whether gold has found
the bottom," said Mark Luschini, chief investment strategist of
Janney Montgomery Scott, a broker-dealer with $55 billion in
assets under management. 
    Spot gold was up 0.7 percent at $1,583.90 an ounce by
3:55 p.m. EDT (1955 GMT).
    U.S. Comex gold futures for June delivery settled up
$14.20 at $1,586.70, with trading volume about 30 percent below
its 30-day average, preliminary Reuters data showed.
    The metal also benefited after the U.S. government said
wholesale inventories fell the most in nearly 1-1/2 years in
February, prompting some economists to lower their estimates for
 first-quarter economic growth. 
    Earlier in the session, gold rose as data showed China's
consumer inflation cooled in March, which left policymakers room
to keep monetary conditions easy. 
    Silver was up 2.5 percent at $27.93 an ounce, its
biggest one-day gain since early November.
    
    BANKS CUT GOLD OUTLOOK
    UBS and Deutsche Bank cut their 2013 gold price forecasts on
Tuesday, with Deutsche lowering its price view by 12 percent to
$1,637 an ounce, saying returns from the metal this year may be
the worst since 2000.
    In the physical market, Hong Kong's net gold flow to
mainland China rebounded last month from three-month lows in
January, reflecting increased demand ahead of the Lunar New Year
holiday, data showed on Tuesday.
    Traders will now closely monitor minutes from the Federal
Reserve's latest policy meeting, set to be released on
Wednesday, for clues on U.S. monetary policy, particularly any
changes to the central bank's $85 billion monthly purchases of
mortgage-backed bonds.
    Among platinum group metals, platinum climbed 0.8
percent to $1,544.74 an ounce and palladium dropped 0.8
percent to $723.97 an ounce.
 3:55 PM EST     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold JUN   1586.70  14.20   0.9  1570.00 1590.10  118,125
 US Silver MAY  27.881  0.743   2.7   27.140  28.020   50,099
 US Plat JUL   1553.10  16.10   1.0  1533.90 1560.00    9,885
 US Pall JUN    733.00   3.20   0.4   723.20  738.50    3,488
                                                              
 Gold          1583.90  10.81   0.7  1570.90 1590.00         
 Silver         27.930  0.680   2.5   27.230  28.070
 Platinum      1544.74  12.74   0.8  1535.00 1554.00
 Palladium      723.97  -6.03  -0.8   726.75  735.75
                                                              
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        131,412   193,013   173,130     13.67   -0.27
 US Silver       63,852    49,676    52,334     20.04   -0.38
 US Platinum     10,612    15,670    11,832     15.46    1.19
 US Palladium     3,525     6,069     5,233                  
                                                              
    

 (Additional reporting by Jan Harvey in London; Editing by Peter
Galloway and Steve Orlofsky)
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