July 20, 2012 / 10:54 AM / 5 years ago

PRECIOUS-Gold edges up on Russian cenbank buying, support seen

5 Min Read

* Russian central bank added 6.2 T gold to holdings in June
    * Bullion posts weekly loss on disappointment over Fed
    * Gold option volatility fell to levels seen attractive
    * Coming up: Chicago Fed index issued on Monday

 (Adds details, updates market activity)
    By Frank Tang
    NEW YORK, July 20 (Reuters) - Gold edged up on Friday as
market sentiment improved after Russia revealed it had boosted
its bullion reserves in June, but losses in equities and crude
oil amid uncertainty over the euro zone debt crisis limited
further gains.
    The metal fell in early trade as the euro tumbled after
Spain's Valencia region said it would seek central government
help to repay its debts, heightening fears over the fiscal
problems of the euro zone's fourth-largest economy.
 
    Gold investors later turned their focus on news that
Russia's central bank raised its gold reserves by 6.2 tonnes to
836.3 tonnes in June.  Official-sector buying
has underpinned gold's rallies in the last several years.
    Bullion, however, posted a 0.2 percent weekly loss after
Federal Reserve Chairman Ben Bernanke earlier this week gave no
hint of new monetary easing. In addition, a string of sluggish
U.S. economic data stirred deflation worries, denting gold's
inflation-hedge appeal.
    "We continue to find some relatively significant support at
levels below $1,570 as markets are viewing them as a buying
opportunity. They will remain the near-term levels of support,"
said David Meger, director of metals trading at brokerage Vision
Financial Markets.
    Spot gold inched up 0.2 percent to $1,584. 2 0 an ounce
by 2:4 6 p.m. EDT (18 46 GMT), r ebounding from a low at $1,573.14
earlier in the session.
    The metal has dropped toward or briefly below $1,570 an
ounce several times this week but managed to hold each time.
Gold has been moving in a trading range between $1,527 and
$1,655 in the past three months.
    " We think a break under $1,500 an ounce co uld open the
floodgates on the downside and end the bull market that started
over 10 years ago," said Ma rk Arbeter, chief technical
strategist at S&P Capital IQ. 
    U.S. COMEX August gold futures for August delivery
s ettled u p $2 . 4 0 an ounce at $1,582 . 8 0 , with trading volume a t
20 percent below its 30-day average, preliminary Reuters data
showed.
    A one-percent drop of the S&P 500 index and
retreating crude oil prices also capped bullion's
upside, offseting record highs in U.S. corn and grain futures
which have underpinned gold this week.
    On the options front, 30-day implied volatility for
at-the-money gold options has dropped 12 percent to a
reading of 15 on Thursday - which marked the lowest since early
May - from 17 on Monday.
    TD Securities strategists said in a note that g old and
silver implied volatilities seeme d to be bottoming out and t hey
believed cu rrent levels are at tractive buys. 
    
    PHYSICAL, INVESTMENT DEMAND WEAK
    Gold demand in India - one of the world's top gold buying
countries - r emained d isappointing as the rupee stayed near a
record low against the do llar, ma king gold more expensive for
Indian consumers. G ol d imports into India have already seen a
more than 50 percent drop this year.  
    The world's largest gold-backed exchange-traded fund SPDR
Gold Trust, reported a nine-tonne drop in its holdings on
Thursday, its biggest one-day outflow since May 22, bringing its
total reserves to a six-month low. 
    Among other precious metals, silver was up 0. 5 
percent at $27.3 0 an ounce, while spot platinum edged
down 0.3 percent to $1,408.07 an ounce and spot palladium 
dropped 1.4 pe rcent to $571.4 3 an ounce.
 2:46 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold AUG   1582.80   2.40   0.2  1572.60 1586.70  108,587
 US Silver SEP  27.302  0.085   0.3   26.740  27.400   37,313
 US Plat OCT   1414.50  -8.60  -0.6  1407.50 1422.00    4,338
 US Pall SEP    576.10  -8.75  -1.5   575.40  584.50    2,097
                                                               
 Gold          1584.20   2.91   0.2  1574.36 1587.01         
 Silver         27.300  0.130   0.5   26.840  27.430
 Platinum      1408.07  -4.23  -0.3  1410.45 1415.50
 Palladium      571.43  -8.07  -1.4   577.75  582.50
                                                               
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        126,343   156,251   192,282     16.87    0.00
 US Silver       40,115    55,058    56,612     26.66   -2.59
 US Platinum      4,431    10,895     9,141        23    0.00
 US Palladium     2,114     3,097     4,548                  
                                                               
 
 (Additional reporting by Jan Harvey in London; Editing by Dale
Hudson and Tim Dobbyn)

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