March 13, 2012 / 5:59 PM / 8 years ago

PRECIOUS-Gold falls 2 pct as Fed easing hopes fade

* Gold tumbles after Fed gives few easing clues
    * Economic optimism, Wall Street rally pressure gold
    * Platinum trades above gold, first time in 6 months
    * Coming up: U.S. import,export prices Wednesday

 (Rewrites, updates prices, market activity, adds details)	
    By Frank Tang and Josephine Mason	
    NEW YORK, March 13 (Reuters) - Gold fell about 2
percent on Tuesday to a seven-week low after the Federal Reserve
acknowledged the recent signs of economic strength and offered
few clues on further U.S. monetary easing.	
    The metal has fallen 7 percent since late February as some
funds might have exited the bullion trade on fears central banks
could be done with quantitative easing or asset purchases by the
Fed after an encouraging U.S. employment recovery.	
   Quantitative easing, or major asset purchases by the Fed,
keeps interest rates and borrowing costs low, which makes gold
more attractive compared with yield- or dividend-bearing assets
such as bonds or stocks.	
   Gold's biggest one-day drop in a week has erased its unusual
premium to platinum. Platinum, which is mainly used by the auto
industry, has recently outperformed bullion due to supply fears
out of top producer South Africa.	
    Also weighing heavily on gold was a Wall Street rally after
JPMorgan Chase announced a dividend increase and major
share repurchase. The S&P 500 rallied nearly 2 percent on
optimism related to a successful stress test on U.S. banks.	
    "The FOMC, plus the Bernanke statement, plus the good data
are wringing QE3 out of the market and the extra QE3 premium
built into gold," said James Steel, chief commodity analyst at
HSBC.	
    Spot gold was down 2.1 percent at $1,663.99 an ounce
by 3:47 p.m. EDT (1947 GMT), having earlier hit a seven-week low
of $1,661.99 an ounce. 	
    Gold fell nearly $100 or 5 percent on Feb. 29 when Fed
Chairman Bernanke did not mention another round of easing in a
statement in his testimony to the U.S. Congress.	
    The metal's losses quickened on Tuesday after bullion again
broke below chart support at its 200-day moving average.	
     U.S. gold futures for April delivery settled down
$5.60 at $1,694.20 an ounce ahead of the FOMC statement. Trading
volume was about 25 percent above its 30-day average,
preliminary Reuters data showed.	
    In a statement after its policy meeting, the Fed offered
just a slight upgrade to its economic outlook, saying it expects
"moderate" growth over coming quarters with the unemployment
rate declining gradually. 	
    "This just reaffirms that the Fed is looking...to try to
keep interest rates as low as possible and to keep monetary
policy as accommodative as possible, and that's a plus for gold
in the medium term," said Axel Merk, chief investment officer of
Merk Funds with about $700 million in assets.	
    Some analysts, however, said the Fed's comment about a spike
in energy costs could temporarily push up inflation also raised
speculation the central bank could tighten monetary policy to
battle rising prices.	
    Gold has more than doubled in price since the Fed unveiled
its first round of QE in late 2008, and a $600 billion stimulus
package in 2010 gave a major boost to commodity prices. 	
    Even with the prospect of no more QE to sustain any major
gold rallies, investors have maintained their interest in the
metal, as evidenced by the rise in global holdings of gold in
exchange-traded products to record highs this week.	
	
    PLATINUM REGAINS PREMIUM TO GOLD	
    With platinum back in pole position for the first time since
September, pressure on gold may intensify, traders said.	
    "The platinum players are jumping on to the buy platinum,
sell gold theme, now that the traditional relationship is
falling," said Donald Selkin, chief market strategist with
National Securities Corp. in New York.	
    Much of the boost to the platinum price this year has come
from a month-long stoppage at the world's second-largest
producer Impala Platinum's largest facility at
Rustenburg, which the company said cost nearly 200,000 ounces in
production and would probably cut deliveries in April by as much
as 50 percent.	
    Spot platinum turned negative in last session. It
eased 0.5 percent to $1,680.43 an ounce, eking out a small
premium to gold and ending for now the rare trend of the last
six months.	
    In other precious metals, silver dropped 1.5 percent
to $33.70 an ounce, while palladium gained 0.7 percent to
$700.83 an ounce.	
	
 3:47 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold APR   1694.20  -5.60  -0.3  1663.00 1706.20  192,010
 US Silver MAY  33.581  0.168   0.5   33.000  33.835   48,097
 US Plat APR   1701.80   6.10   0.4  1684.30 1704.60    7,594
 US Pall JUN    708.85   4.60   0.7   697.90  710.65    2,250
 
 Gold          1663.99 -35.06  -2.1  1664.73 1705.36         
 Silver         33.070 -0.510  -1.5   33.020  33.800
 Platinum      1680.43  -7.67  -0.5  1686.50 1700.50
 Palladium      700.83   4.98   0.7   698.70  706.47
 
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        217,601   173,815   193,810     20.36    0.84
 US Silver       50,158    67,296    73,896     33.86    1.06
 US Platinum      9,908     8,631     8,400     23.59   -0.35
 US Palladium     2,257     5,514     4,672                  
 
 	
 (Editing by David Gregorio, Dale Hudson and Bob Burgdorfer)
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