Friday, 01 June 2012 00:00

PRECIOUS-Gold vaults 4 pct for biggest 1-day rise in 3 years

Written by  Rueters

* Weak U.S. payrolls stoke further US easing talk

* Gold breaks ranks with riskier assets; stocks, oil slide

* Institutional investors poised to buy more gold

* Coming up: U.S. factory orders Monday

Rewrites; updates comment, market activity; adds graphic link) By Frank Tang NEW YORK, June 1

(Reuters) - Gold surged 4 percent on Friday, its biggest one-day rise in more than three years, as a surprisingly weak U.S. payrolls report added to fears about a global economic slowdown and fuelled talk of further U.S. monetary easing.

The precious metal fell in early trading, then rebounded $60 an ounce from its session low as funds piled into gold for protection against economic uncertainty after the U.S. unemployment rate rose for the first time in 11 months. Gold rose 3.5 percent this week, its largest gain since late January, when investors were already fretting over Spain's poor finances and a possible Greek exit from the euro zone, which could send Europe's debt crisis spiral out of control. Bullion broke its trend of trading in sync with riskier assets, rising on a day when Brent crude oil plummeted below $100 a barrel and the Dow Jones industrial average fell 2 percent to wipe out this year's gains. Technical buying also helped as the metal is setting up for a bullish triple-bottom chart pattern after gold held key support near $1,530 an ounce, which it held for most of this year.

Gold's rally was reminiscent of its rise earlier this year when the Federal Reserve said it would keep interest rates at zero for the next several years and indicated a new stimulus program was possible to reinvigorate economic growth. "People are speculating that there will be some form of program coordinated by central banks, which is ultimately inflationary and gold catches a bid," said Jeffrey Sherman, commodities portfolio manager of asset manager DoubleLine Capital which oversees $35 billion in assets.

Spot gold hit a near two-week high of $1,629.41 an ounce and was up 3.9 percent at $1,624.20 at 3:11 p.m. EDT (1911 GMT), its largest one-day rally since January 2009. U.S. gold futures for August delivery settled up $57.90 at $1,620.50, with trading volume about 50 percent above its 30-day average, preliminary Reuters data showed. FUND, TECHNICAL BUYING Gold is forming a potential triple-bottom pattern dating back to last September, said Rick Bensignor, chief market strategist of Merlin Securities. Gold ended May with its fourth straight monthly decline, the longest in 12 years. Friday's rally extended gold's gain year to date to around 4 percent. "Larger institutions will commit money to gold in ways they never had before. We are talking about CALPERS, Yale and Harvard," said Robert Lutts, chief investment officer of Cabot Money Management with over $500 million in client assets. Prominent hedge fund managers led by John Paulson have in recent years invested in gold as a hedge against inflation and the loss of purchasing power in their portfolios as a result of easy monetary policy used by central banks. Gold gained 15 percent earlier this year after the U.S. Federal Reserve said in January it would keep interest rates near zero until at least late 2014 and could introduce a fresh round of asset-purchase program known as quantitative easing.

Among other precious metals, spot silver rose 2.4 percent at $28.44 an ounce.

Spot platinum was up 2.2 percent at $1,440.24 an ounce, while spot palladium edged up 0.2 percent at $609.99 an ounce.

3:11 PM EDT LAST/ NET PCT LOW HIGH CURRENT SETTLE CHNG CHNG VOL US Gold JUN 1620.50 57.90 3.7 1545.50 1630.00 2,791 US Silver JUL 28.512 0.755 2.7 27.170 28.680 61,265 US Plat JUL 1433.20 15.60 1.1 1388.80 1447.60 13,708 US Pall JUN 612.30 0.20 0.0 605.65 614.15 43 Gold 1624.20 61.50 3.9 1546.00 1629.41 Silver 28.440 0.680 2.4 27.240 28.690 Platinum 1440.24 30.49 2.2 1392.60 1442.99 Palladium 609.99 1.51 0.2 599.85 614.25 TOTAL MARKET VOLUME 30-D ATM VOLATILITY CURRENT 30D AVG 250D AVG CURRENT CHG US Gold 290,174 201,302 192,594 24.91 1.65 US Silver 69,169 52,639 52,139 33.62 -0.82 US Platinum 15,270 7,262 7,972 18 0.00 US Palladium 4,555 5,752 4,505

Last modified on Tuesday, 19 June 2012 17:23