July 11, 2012 / 11:04 AM / 5 years ago

PRECIOUS-Gold flat as Fed minutes dent easing hopes

5 Min Read

* Gold trims gains after FOMC June minutes
    * Charts show gold making lower highs, lower lows
    * Investment demand off; ETPs see steady outflows
    * Coming up: U.S. import/export prices Thursday

 (Recasts, adds details after FOMC minutes, updates comment,
market activity)
    By Frank Tang
    NEW YORK, July 11 (Reuters) - Gold ended nearly flat on
Wednesday after the metal pared early gains on signs that U.S.
economic recovery might need to weaken further for Federal
Reserve policymakers to unanimously agree on more stimulus.
    Bullion trimmed gains as the dollar rose after the minutes
of the Fed's June meeting showed that a few officials on the
policy-setting Federal Open Market Committee thought recent
softness in the economy was sufficient to justify bolder action.
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    "We are in an environment where short-term dollar gains will
lead to pullback in gold," said Sean McGillivray, head of asset
allocation at Great Pacific Wealth Management.
    "If we continue to see contagion around the world, it's
really difficult for any dollar-denominated asset even
inflationary hedge such as gold to pick up steam," he said. 
    The precious metal currently hovered near its one-year low,
and analysts said more losses could be in store on technical
weakness.
    Spot gold was up 0.1 percent on the day at $1,568.64
an ounce by 2:39 p.m. EDT (1839 GMT).
    U.S. COMEX August gold futures settled down $4.10 at
$1,575.70 an ounce, narrowing the difference between the futures
price and spot gold. Trading volume was about 20 percent below
its 30-day average, preliminary Reuters data showed.
    The metal had dropped 3 percent in the last four sessions on
signs of global economic slowdown and frustrations over a lack
of more monetary easing by the U.S. central bank.
    The report suggested a majority of the FOMC voting members
was not yet on board to call for more easing - at least not
before last week's employment report, which showed a paltry
80,000 new jobs were created in June. 
    "It's clear that economic environment has deteriorated after
the FOMC. It's very clear that the Fed would like to give us
stimulus, and that should be supportive to gold," said Axel
Merk, chief investment officer at Merk Funds, which manages $600
million in currency mutual-funds assets.
    
    TECHNICAL WEAKNESS
    Gold is just $40 above its one-year lows near $1,530-1,540
an ounce, and analysts said a failure to hold that support level
could lead to a steep price correction.
    "The long-term, upward-sloping trend line in gold's
favor is in jeopardy of being broken," said Dennis Gartman, a
veteran trader and publisher of the daily Gartman Letter.
    Gartman said that the presence of lower lows and lower highs
on gold charts, and bullion's 200-day moving average trending
lower since mid-May suggested more technical selling to come.
    Meanwhile, lackluster investment demand in gold failed to
underpin prices.
    By Tuesday's close, holdings of gold in the world's largest
exchange-traded products (ETPs) fell to the lowest level since
mid-June, down nearly a quarter of a million ounces in two
trading days, the largest two-day drop since May. 
    The bulk of the outflows are coming from the SPDR Gold Trust
, the world's largest gold ETP, which has shed 333,500
ounces in the last three weeks. 
    In other precious metals, silver rose by 0.6 percent
on the day to $26.97 an ounce.
    Among platinum group metals, platinum eased 15 cents
on the day to $1,417.18 an ounce, while palladium rose
0.6 percent to $574.53.
    
 2:39 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold AUG   1575.70  -4.10  -0.3  1565.50 1583.40  120,633
 US Silver SEP  27.023  0.141   0.5   26.760  27.240   29,584
 US Plat OCT   1431.60   1.90   0.1  1420.40 1435.90    5,934
 US Pall SEP    582.95   6.35   1.1   575.00  583.85    1,877
                                                              
 Gold          1568.64   0.95   0.1  1566.11 1582.80         
 Silver         26.970  0.150   0.6   26.820  27.250
 Platinum      1417.18  -0.15   0.0  1424.10 1429.25
 Palladium      574.53   3.55   0.6   577.65  581.50
                                                              
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        143,444   179,178   193,916     19.37   -0.16
 US Silver       35,320    60,190    57,824     31.24    0.58
 US Platinum      6,074    12,148     9,110        23    0.00
 US Palladium     1,900     4,043     4,606                  
                                                              
 

 (Additional reporting by Amanda Cooper in London; Editing by
David Gregorio and Marguerita Choy)

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