PRECIOUS-Gold eases but hovers near 6-month high, eyes Fed

by on September 10, 2012 4:26 pm GMT

Mon Sep 10, 2012 12:26pm EDT

* Gold eases on weak Chinese sales data, eyes Fed meeting
    * Palladium up; Chinese car sales rise in Aug
    * Record ETP holdings; futures spec holdings at 1-yr high

    By Frank Tang and Amanda Cooper
    NEW YORK/LONDON, Sept 10 (Reuters) - Gold eased on Monday as
investors took profits, but the metal stayed near six-month
highs after last week's disappointing  U.S. payrolls data
boosted hopes that the Federal Reserve could unveil new stimulus
as early as Thursday.
    Palladium also rose 3 percent on better demand expectation
after encouraging Chinese vehicle sales data. 
    Weak Chinese trade data also prompted the bullion selling
following three consecutive weeks of sharp gains, which were
accelerated by the European Central Bank's bond-buying program 
last week and possible new Fed actions to stimulate an ailing
economy at its two-day policy meeting concluding on Thursday.
    Investment in gold-backed exchange-traded products (ETPs)
reached a record high last week, while some investors took
profits after Friday's data from the U.S. Commodity Futures
Trading Commission showed holdings of U.S. gold futures by
speculators rose to their highest in a year. 
    "We could see a pullback in gold at anytime as prices are
fairly overbought on a daily basis, and once we hit the $1,800
an ounce level, we think there could be a multi-week
congestion," said Mark Arbeter, chief technical strategist at
S&P Capital IQ. 
    Spot gold was down 0.3 percent at $1,731.01 an ounce
by 11:40 a.m. EDT (1540 GMT), having risen 2.7 percent last
week, racking up a third consecutive weekly increase and its
longest stretch of weekly gains since the start of the year. 
    U.S. gold futures for December delivery were down
$6.90 at $1,733.60 an ounce with trading volume set to finish
below average, preliminary Reuters data showed.
    On weekly charts, gold could complete a very bullish
triple-bottom pattern if prices rose above $1,800 an ounce this
week, said CitiFX strategists.
   Inflation worries have underpinned gold after Friday's much
weaker-than-expected U.S. jobs data stoked expectations that the
Fed might choose to use a third round of quantitative easing, or
printing money to buy government bonds to keep long-term
interest rates low. 
   Gold prices have doubled in the last four years as the Fed
implemented the first two rounds of quantitative easing.
    Holdings of gold in the major ETPs last week touched a
record 72.37 million ounces, having drawn in nearly 2.0 million
ounces of metal in a month. 
    Hong Kong's July gold shipments to China nearly doubled on
the year, while exports over the first seven months exceeded
total 2011 volumes, suggesting China is well on its way to
overtake India as the world's top gold consumer. 
    Palladium outperformed the rest of the precious metal
complex, rising by 2.9 percent on the day to $667.50 an ounce to
hold around its highest since early May, helped by a 8 percent
jump in Chinese car sales figures for August. 
    Palladium relies heavily on the Chinese car market, the
world's largest, for demand, where it is used in catalytic
converters for gasoline-powered engines.
    Platinum rose 0.9 percent to $1,596.25 an ounce,
while silver edged up 0.1 percent to $33.69 an ounce.
 Prices at 11:40 a.m. EDT (1540 GMT)                           
                               LAST      NET    PCT     YTD
                                         CHG    CHG     CHG
 US gold                    1733.60    -6.90  -0.4%   10.6%
 US silver                   33.705    0.072   0.2%   20.7%
 US platinum                1601.50     5.20   0.3%   14.4%
 US palladium                671.65    17.65   2.7%    2.4%
 Gold                       1731.01    -4.88  -0.3%   10.7%
 Silver                       33.69     0.04   0.1%   21.7%
 Platinum                   1596.25    14.55   0.9%   14.6%
 Palladium                   667.50    18.50   2.9%    2.3%
 Gold Fix                   1732.00    -0.75   0.0%   10.0%
 Silver Fix                   33.60   138.00   4.3%   19.2%
 Platinum Fix               1593.00     3.00   0.2%   15.4%
 Palladium Fix               661.00     0.00   0.0%    3.9%