Monday, 02 July 2012 23:43

PRECIOUS-Gold gains, easing eyed after bleak data

Written by  Rueters
 * US manufacturing shrinks in June, triggering QE hopes
 * Spot gold may rise to $1,606.79/oz - technicals
 * Coming up: U.S. factory orders, May; 1400 GMT

 (Adds details, comments; updates prices)
 By Rujun Shen
 SINGAPORE, July 3 (Reuters) - Gold edged higher on Tuesday,
after weak manufacturing data across the globe rekindled hopes
for more easing from central banks to support recovery.
 Gold thrives on abundant money supply and low interest
rates, which increases inflation outlook and benefits bullion
which is seen as a hedge against rising prices.
 U.S. manufacturing shrank in June for the first time in
nearly three years, following a string of data from Europe and
Asia that suggested the euro zone debt crisis was reverberating
throughout the global economy.  
 "You can take it as a sign that chances of QE (quantitative
easing) are improving," said Dominic Schnider, an analyst at UBS
Wealth Management in Singapore.
 But this does not mean that a QE will come anytime soon, he
cautioned, given the Fed just recently extended its "Operation
Twist" programme which involves selling short-term securities to
buy longer-term ones to keep long-term borrowing costs down.
 "We are unlikely to see a big add-on after Operation Twist
was extended, unless things fell off the cliff. And remember,
when things did fall off the cliff in 2008, gold fell as well."
 Spot gold edged up 0.3 percent to $1,601.74 an ounce
by 0349 GMT. U.S. gold futures contract for August delivery
 also gained 0.3 percent to $1,602.50.
 The all-important U.S. non-farm payrolls due Friday,
expected to shed light on the state of the labour market in the
world's top economy, will be scrutinised by investors eager to
predict the next move by the U.S. Federal Reserve.
 Asia's physical gold market fell back into slumber after
short-lived excitement late last week when bullion dropped below
$1,550 per ounce before staging a 3-percent rally.
 "Customers went in to pick up gold below $1,560 last week
but now the market is quiet again," said a Singapore-based
dealer, adding that gold bar premiums were about 70 cents above
London prices.
 A rally in the rupee against the dollar last Friday helped
gold purchases from India, traditionally the world's top bullion
 Spot silver rose nearly 0.9 percent to $27.72,
holding close to last Friday's high of $27.91.
 "The dimmed economic outlook leads to expectations of more
stimulus, which will weaken the dollar and help metals," said a
Shanghai-based trader.
 "Of course silver will be relatively weaker than gold due to
its industrial nature, but we do sense anticipation of a further
price rise in the physical market."
 Precious metals prices 0349 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1601.74    5.06   +0.32      2.43
  Spot Silver        27.72    0.24   +0.87      0.11
  Spot Platinum    1456.00    7.25   +0.50      4.52
  Spot Palladium    575.50    3.75   +0.66    -11.80
  COMEX GOLD AUG2  1602.50    4.80   +0.30      2.28         5673
  COMEX SILVER SEP2  27.71    0.21   +0.75     -0.75         2239
  Euro/Dollar       1.2596
  Dollar/Yen         79.77
  COMEX gold and silver contracts show the most active months
 (Editing by Himani Sarkar)


Last modified on Monday, 02 July 2012 23:46