Thursday, March 27, 2014

PRECIOUS-Gold slips toward $1,300 on strong US durable goods data

* Liquidation related to COMEX April option expiry weighs
    * Russia, Turkey raise gold reserves in February
    * Barclays ups gold price forecast
    * Coming up: U.S. GDP, jobless claims Thursday

By Frank Tang and Jan Harvey

NEW YORK/LONDON, (Reuters) - Gold fell to near
$1,300 an ounce on Wednesday as encouraging U.S. manufacturing
data reduced bullion's appeal to institutional investors as a
hedge against economic uncertainty, sending prices to their
lowest in more than five weeks.

The metal was under pressure after data showed orders for
long-lasting U.S. manufactured goods rebounded in February.
However, another U.S. report showed a surprise drop in a gauge
of planned spending on capital goods.

Liquidation pressure related to the expiry of COMEX April
options and lack of physical buying also weighed down on prices,
traders said.

"Funds bought it quite aggressively over the past few weeks,
and although there has been liquidation, I think they are still
long," David Govett, Marex Spectron's head of precious metals,

Spot gold was down 0.6 percent at $1,302.31 an ounce
by 2:32 p.m. EDT (1832 GMT), having fallen to $1,300.09 in
earlier trade, its lowest since mid-February.

U.S. COMEX gold futures for April delivery settled
down $8 an ounce at $1,303.40, with trading volume about 10
percent above its 30-day average, preliminary Reuters data

Analysts said many hedge funds sharply cut their bullish
bets after prices touched a six-month high of $1,391.76 early
last week, as mounting political tensions and fears over slowing
economic growth spurred demand for the metal as an insurance
against risk.

But comments from U.S. Federal Reserve Chair Janet Yellen
later in the week, which suggested interest rates could rise in
the first half of 2015, raised the opportunity cost of holding
non-yielding bullion and sparked a sharp retracement in prices.

In official gold-sector activity, Russia increased its gold
holdings by 7.247 tonnes to 1,041.96 tonnes in February, and
Turkey also raised its bullion reserves after a sharp fall the
previous month, data from the International Monetary Fund

In research news, CPM Group said in its annual Gold Yearbook
it expects gold prices to move slight higher over the course of
2014, supported by buying from shorter-term investors who expect
the downside for the yellow metal is limited.

Barclays also raised its 2014 gold forecast to $1,250 per
ounce from $1,205, saying the change comes after taking into
account gold's year-to-date performance.

Among other precious metals, silver was down 0.9

percent to $19.74 an ounce, and palladium dropped 0.9 percent to
$774.60 an ounce. Platinum fell 0.8 percent to $1,401.50
an ounce.
The chief executive of world No. 3 platinum producer Lonmin
has told staff to take voluntary leave because

a wage strike now entering its 10th week at its South African
operations looked set to continue.

2:32 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
               SETTLE   CHNG  CHNG                       VOL
US Gold APR   1303.40  -8.00  -0.6  1300.90 1317.10  133,210
US Silver MAY  19.780 -0.199  -1.0   19.755  20.145   34,192
US Plat APR   1406.50 -14.40  -1.0  1401.00 1427.70   18,865
US Pall JUN    781.15  -8.25  -1.0   774.10  789.00    6,012
Gold          1302.31  -8.13  -0.6  1300.70 1316.40        
Silver         19.740 -0.180  -0.9   19.760  20.120
Platinum      1401.50 -10.90  -0.8  1402.00 1425.50
Palladium      774.60  -7.10  -0.9   776.50  787.50

               CURRENT   30D AVG  250D AVG   CURRENT     CHG

US Gold        191,403   184,444   186,233     17.11   -0.06
US Silver       38,562    56,572    58,375     26.12   -0.73
US Platinum     33,203    15,978    13,435     19.18   -0.70
US Palladium     6,043     7,441     5,748     28.65    0.51

(Additional reporting by Clara Denina in London, Lewa Pardomuan
in Singapore; Editing by Dale Hudson, Jane Baird and Cynthia

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