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PRECIOUS-Gold up as stocks fall on Deutsche Bank worries; dollar caps gains
September 30, 2016 / 5:06 AM / a year ago

PRECIOUS-Gold up as stocks fall on Deutsche Bank worries; dollar caps gains

* Spot gold set for 1 pct gain in September
    * Palladium off 7-week highs

 (Adds quotes, updates prices)
    By Sethuraman N R
    Sept 30 (Reuters) - Gold edged up on Friday as equities fell
on worries over the stability of Deutsche Bank, but a firmer
dollar capped gains.
    Spot gold rose 0.3 percent to $1,323.70 an ounce by
0648 GMT. The yellow metal was however on track to end the week
down nearly one percent. Gold has gained one percent so far in
the month and is likely to end flat over the three-month period.
    U.S. gold futures were mostly flat at $1,326.70 an
ounce.
    Deutsche Bank shares slumped to a record low after Bloomberg
reported that trading clients had withdrawn excess cash and
positions held in the largest German lender. 
    "Concerns over Deutsche Bank are helping to provide an
underlying level of support for gold," MKS PAMP Group trader Sam
Laughlin said.
     "However, we see the metal moving closer to the 100-day
moving average around $1,310, while below this, the recent low
around $1,302.50 will see broad support sit between $1,300 -
$1,305."
    Asian stocks extended losses on Friday as worries about the
health of Deutsche Bank weighed on financial shares and as oil
prices inched back from near-one month highs on scepticism over
OPEC's new plan to curb output. 
    "Gold is probably going to trade sideways for some time,"
said Brian Lan, managing director at Singapore-based gold dealer
GoldSilver Central, adding that the charts were providing mixed
signals.
    "If stocks aren't doing well then we might see a little
support for gold."
    U.S. economic growth was less sluggish than previously
thought in the second quarter as exports grew more than imports
and businesses raised their investments. 
    However, contracts to buy previously owned U.S. homes
dropped in August to the lowest level since January
  
    When positive data is released, investors raise bets on a
U.S. interest rate hike, which would increase the opportunity
cost of holding non-yielding bullion.
    "Any downward move in global equity markets in light of
higher interest rates and over stretched equity valuations could
result in a renewed move higher for gold...a stronger dollar
could keep any over sized rallies somewhat in check," INTL
FCStone analyst Edward Meir said in a note.
    "We would rather trade gold somewhat from the long side
right now, as we suspect we could see a bit more sloppiness for
stocks in the light of Deutsche Bank uncertainties."
    The dollar index, which measures the greenback
against a basket of currencies, was firm at 95.573.
    Silver was up 0.1 percent at $19.11 an ounce.
    Platinum was up 0.2 percent at $1,029 an ounce and
palladium rose 0.9 percent to $718.50. Palladium touched
a 7-week high of $721.30 on Thursday.

 (Reporting by Nallur Sethuraman in Bengaluru; Editing by Joseph
Radford and Christian Schmollinger)

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