April 5, 2012 / 2:42 PM / 6 years ago

PRECIOUS-Gold rises in thin trade but set for weekly loss

* Crude oil rally, short covering help boost gold
    * Gold set for over 2 pct weekly loss on dashed QE hopes
    * Some hedge funds reduced gold stake as momentum fades
    * Coming up: U.S. nonfarm payrolls Friday

 (Recasts, updates comments, market activity, adds details)	
    By Frank Tang and Michelle Martin	
    NEW YORK/LONDON, April 5 (Reuters) - Gold rose on Thursday,
as investors covered short positions after a sharp two-day
pullback, and a crude oil rally also buoyed the precious metal
that sank early this week on disappointment about further U.S.
monetary easing.	
    Bullion rebounded from its biggest two-day drop in a month
after it steadied above psychological resistance at $1,600 an
ounce, where investors had placed heavy put options to protect
against further losses. 	
    Trading volume was thin ahead of Friday's key U.S. nonfarm
payrolls report and the Good Friday holiday in most Western
markets. Gold remained on track for a weekly decline exceeding 2
percent after minutes of the latest Federal Reserve policy
meeting doused hopes for further U.S. monetary stimulus.   	
    Market watchers said some hedge funds might have reduced
gold holdings due to stronger U.S. economic data and easing of
fears about European debt.	
    "A lot of the gold trade by hedge funds was specifically
tied to a new round of Fed stimulus," said Jeffrey Sica, chief
investment officer of SICA Wealth Management with more than $1
billion in assets.	
    "If there is any perception that momentum in gold will
taper, hedge funds will take the opportunity to sell. Gold is
always vulnerable because of how well it has done," he said. 	
    Spot gold was up 0.6 percent at $1,628.31 an ounce by
2:36 p.m. EDT (1836 GMT). 	
    Gold briefly broke back above $1,630 an ounce as a drop in
U.S. weekly initial jobless claims pulled the dollar from its
highs and stocks from their lows, but was unable to sustain the
    U.S. gold futures for June delivery settled up $16
percent at $1,630.10 an ounce, with trading volume about halved
of its 30-day average, preliminary Reuters data showed.	
    Gold has fallen 2.3 percent so far this week, the
third-worst weekly drop of the year, retreating further from the
March high above $1,790 an ounce on hopes of more Fed stimulus.	
    Dennis Gartman, a veteran trader, said that gold on weekly
charts suggested the metal has been in a bearish trend since the
first quarter of 2011 as each new interim low has been lower
than the previous one.	
    Gartman added that gold's uptrend on weekly charts has been
clearly broken. 	
    Analysts said that gold's record high at above $1,900 an
ounce in September 2011 reflected the premium of a third round
of Fed asset buying known as quantitative easing (QE).	
    The metal had dropped 3.5 percent in the previous two
sessions as the market had largely factored in QE3 after the
U.S. central bank in January said it would keep rates near zero
until 2014. 	
    However, INTL FCStone metals analyst Edward Meir said he
cannot rule out the possibility of U.S. economic recovery
"topping out", which could boost precious metals as the Fed
brings the easing option back onto the table.	
    Among other precious metals, spot silver was up 1.1
at $31.67 an ounce, spot platinum edged up 0.2 percent at
$1,595.19 an ounce, and spot palladium gained 2.1 percent
at $642.70 an ounce.	
 2:36 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold JUN   1630.10  16.00   1.0  1620.70 1634.80  106,328
 US Silver MAY   31.73  0.686   2.2   31.175  31.810   36,600
 US Plat JUL   1607.60   9.00   0.6  1590.20 1611.20    7,211
 US Pall JUN    644.80  12.05   1.9   629.90  646.00    3,098
 Gold          1628.31   9.06   0.6  1620.63 1633.06         
 Silver         31.670  0.350   1.1   31.240  31.800
 Platinum      1595.19   2.64   0.2  1590.00 1604.99
 Palladium      642.70  13.25   2.1   631.75  643.25
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        117,606   202,949   196,995     18.72   -0.46
 US Silver       44,288    62,099    60,020     31.42    3.56
 US Platinum      7,298    10,929     8,408        19    0.00
 US Palladium     3,105     4,904     4,678                  
 (Editing by David Gregorio and Sofina Mirza-Reid)

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