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PRECIOUS-Gold regains strength after fall; ETF holdings slip

Published 04/13/2011, 02:11 AM
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* Gold to slide more to $1,437-technicals [ID:nL3E7FD06P]

* Coming Up: U.S. Retail sales mm Mar; 1230 GMT (Updates prices)

By Lewa Pardomuan

SINGAPORE, April 13 (Reuters) - Gold bounced higher on Wednesday after posting its biggest decline in a month in the previous session, shrugging off falls in exchange traded fund holdings and gaining support on inflation concerns in major gold buyer China.

Silver was within sight of its highest level in more than three decades as steady physical demand from India helped it regain $40 an ounce. The gold-to-silver ratio was at a 28-year low.

Spot gold added $2.81 to $1,456.76 an ounce by 0558 GMT after falling as low as $1,443.49 an ounce on Tuesday, tracking declines in oil prices.

Bullion hit a record around $1,476 an ounce on Monday on the prospect of more declines in the dollar.

"You can say that we're going through a consolidation phase. Physical demand is still certainly out there," said Jonathan Barratt, managing director of Commodity Broking Services.

However, Barratt said a client note by Goldman Sachs to lock in recent commodity price gains could serve as a "wake up" call on price levels.

Goldman Sachs expects Brent crude to fall towards $105 in coming months, according to a note e-mailed to clients, after recommending on Monday they close trades on a basket of commodities that include U.S. crude. [ID:nN12164096] [ID:nLDE73B02E]

But steady physical buying from China, the world's second largest gold consumer, showed that inflation was a concern, with crude oil prices still above $100.

China's central bank raised interest rates on April 5 for the fourth time since October, underlining Beijing's determination to clamp down on inflation. [ID:nSGE735004]

China is due to release key economic data including March inflation, industrial output as well as the economic growth for the first quarter on Friday, which may give investors clues on Beijing's next policy move. [ID:nL3E7F70G2]

South Korea's central bank on Wednesday lifted its forecast for 2011 consumer inflation while maintaining its economic growth projection, a day after it kept interest rates unchanged despite high inflation pressure. [ID:nL3E7FC36I]

Central banks turned net buyers of gold last year and cut exposure to debt issued by euro zone members Greece, Ireland and Portugal, an annual survey of the world's reserve managers showed. [ID:nL9E7F802W]

Spot gold is expected to fall more to $1,437 per ounce based on an ascending trendline and a Fibonacci retracement analysis, according to Wang Tao, Reuters market analyst for commodities and energy technicals.

For a 24-hour gold technical outlook:

http://graphics.thomsonreuters.com/WT1/20111304100144.jpg

PHYSICAL MARKET

Activity in the physical market had yet to pick up on Wednesday after light overnight buying from India, the world's largest consumer.

"We've seen some gold buying from China, but there's not much activity today because Thailand is on holiday. Indonesia is also on the sidelines because the price is stuck at the current level. They don't want to either buy or sell," said a dealer in Singapore.

"There was light buying from India last night but the demand for silver is growing, even though silver is getting more expensive."

Spot silver rose 32 cents to $40.36 an ounce, not far from a 31-year high at $41.93 struck on Monday.

Dealers said India has showed steady interest in silver since early this year, although it was not clear whether the metal was now used a substitute to gold. India is in the midst of the wedding season, with gold jewellery a common gift.

Holdings on gold and silver ETFs slipped as investors booked profits from recent peak. The world's largest gold-backed exchange-traded fund, SPDR Gold Trust , said its holdings slipped to 1,216.299 tonnes by April 12 from 1,217.209 tonnes on April 7.

IShares Silver Trust said its holdings fell to 11,212.53 tonnes by April 12 from a record of 11,242.89 tonnes hit on April 8.

U.S. gold futures for June rose $4.4 an ounce $1,458 an ounce.

In other markets, Tokyo shares nudged higher, with Tokyo Electric surging on a report that its liabilities stemming from the nuclear crisis may be capped, while the euro held steady against the dollar after touching a 15-month high of $1.4520 on Tuesday on trading platform EBS. Precious metals prices 0558 GMT Metal             Last    Change  Pct chg  YTD pct chg  Turnover Spot Gold        1456.76    2.81   +0.19      2.63 Spot Silver        40.36    0.32   +0.80     30.78 Spot Platinum    1778.00   12.30   +0.70      0.59 Spot Palladium    764.72    3.32   +0.44     -4.35 TOCOM Gold       3953.00   13.00   +0.33      6.01        66812 TOCOM Platinum   4841.00   16.00   +0.33      3.09        12454 TOCOM Silver      109.40    1.40   +1.30     35.06         2247 TOCOM Palladium  2086.00  -8.00   -0.38     -0.52          276 Euro/Dollar       1.4486 Dollar/Yen         84.19 TOCOM prices in yen per gram. Spot prices in $ per ounce.

(Reporting by Lewa Pardomuan; Editing by Ed Lane)

Reuters Terminal users can see related news and prices by double clicking on the codes in brackets: - All precious metals headlines - Precious metals market reports - Daily fixing headlines - Technical analysis - Indian gold reports - European gold prices <0#PREC> - London interbank gold forward rates <0#GOFO=> - London silver forwards - Gold lease rates <0#LGLR=> - London Bullion Market Association - New York Comex gold <0#GC:> and silver <0#SI:> - New York platinum <0#PL:> and palladium <0#PA:> - Asian gold prices <0#PREC> - Australian precious metals prices <0#AUPREC=> - Shanghai Gold Exchange prices - Hong Kong gold exchange prices - Hong Kong bullion prices - Indian bullion prices <0#PREC-IN> - Japanese producer prices For Related News and other topics, double click on one of these codes: SPEED GUIDES

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