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PRECIOUS-Gold heads for 3rd day of loss as risk appetite rises

Published 08/15/2011, 03:24 AM
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* Asian buying offset some selling pressure in gold

* Gold-platinum moves into discount

* Gold may rise to $1,768 - technicals

* Coming up: U.S. NAHB housing mkt index for Aug; 1400 GMT (Writes through; adds comment, details; updates prices)

By Rujun Shen

SINGAPORE, Aug 15 (Reuters) - Gold fell 0.4 percent on Monday, on course for a third consecutive session of loss, as a revived risk appetite drives investors to stocks and away from safe havens.

Buying interest in Asia, especially from China, helped offset some of the selling pressure, dragging spot gold back from a 1-percent loss earlier in the day, traders and analysts said.

"Investors have switched from the buy-gold-sell-stocks mode to sell-gold-buy-stocks mode as Asian stock markets have performed better than gold," said a Hong Kong-based dealer.

Asian stocks bounced on Monday following Wall Street gains, with Japan's Nikkei up 1.4 percent.

Spot gold traded down 0.4 percent to $1,738.46 an ounce by 0645 GMT. U.S. gold lost 0.1 percent to $1,740.40.

The sharp decline in global spot prices opened up an arbitrage window for Chinese market participants. The gold forward contract on the Shanghai Gold Exchange stood at 358.70 yuan a gram, or $1,745.79 an ounce.

"We saw strong buying interest from Shanghai after the markets opened there," said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.

The most-active Shanghai gold futures was last quoted at 360.24 yuan a gram, equivalent to $1,753.28 an ounce.

The fall in gold-backed exchange-traded funds added to gold bulls' concern. Holdings of the SPDR Gold Trust, the world's largest gold ETF, dropped 1 percent on the day to 1,260.173 tonnes by Aug. 12, the lowest in a week and half.

In addition, data showed that speculators scaled back their bullish bets in U.S. gold futures and options last week, even as gold hit a record high of $1,813.79 on Aug. 11.

But technical analysis suggested that gold could rebound to $1,768 an ounce in the next 24 hours, said Reuters market analyst Wang Tao.

Gold rallied to a record high of $1,813.79 last Thursday, as investors fled riskier assets to seek safe haven in bullion in the aftermath of the U.S. credit downgrade.

The gold market is waiting for U.S. data on Monday that will show changes in investment holdings by hedge funds and institutional investors during the second quarter.

Eyes will be on John Paulson, the biggest holder of the SPDR Gold Trust.

Spot platinum lost 0.2 percent to $1,789.99 an ounce, after rising for four straight sessions.

"The gold-platinum spread has gone from a premium in the middle of last week to a discount of about $50," said a Singapore-based trader.

"If and when we get improving sentiment, we should see that discount expanding to maybe $150."

Ebbing panic in the markets is likely to help other industrial metals, such as silver and palladium, he added.

Precious metals prices 0645 GMT Metal Last Change Pct chg YTD pct chg Volume Spot Gold 1738.46 -7.40 -0.42 22.47 Spot Silver 38.98 0.00 +0.00 26.31 Spot Platinum 1789.99 -4.01 -0.22 1.27 Spot Palladium 752.47 9.47 +1.27 -5.88 TOCOM Gold 4301.00 -46.00 -1.06 15.34 79747 TOCOM Platinum 4470.00 -3.00 -0.07 -4.81 6680 TOCOM Silver 95.90 0.70 +0.74 18.40 703 TOCOM Palladium 1881.00 30.00 +1.62 -10.30 193 COMEX GOLD DEC1 1740.40 -2.20 -0.13 22.44 23286 COMEX SILVER SEP1 39.04 -0.08 -0.20 26.16 4906 Euro/Dollar 1.4315 Dollar/Yen 76.88 TOCOM prices in yen per gram. Spot prices in $ per ounce. COMEX gold and silver contracts show the most active months (Editing by Michael Urquhart)

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