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

by on September 10, 2012 7:20 pm GMT

Mon Sep 10, 2012 3:20pm EDT

* Gold slips on weak Chinese sales data, eyes Fed meeting
    * Palladium up; Chinese car sales rise in August
    * COMEX open interest rises to six-month high
    * Coming up: US international trade data Tuesday

    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 a six-month
high after last week's disappointing  U.S. payrolls data boosted
hopes that the Federal Reserve could unveil new stimulus as
early as Thursday.
    Palladium rose nearly 3 percent on better demand expectation
after encouraging Chinese vehicle sales data.
    Weak Chinese trade data prompted some bullion selling
following three consecutive weeks of sharp gains, gains that 
were accelerated by the European Central Bank's bond-buying
program last week and by hopes for Fed action to stimulate the
U.S. economy at its two-day policy meeting to conclude on
    Investment in gold-backed exchange-traded products (ETPs)
reached a record high last week, while some investors took
profits after the U.S. Commodity Futures Trading Commission on
Friday 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 0.4 percent at $1,728.97 an ounce
by 2:42 p.m. EDT (1842 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.
    Despite bullion's sharp rally, its relative strength index
(RSI) was slightly overbought at 78 on Monday after rising above
80 in the previous session.
    U.S. gold futures for December delivery settled down
$8.70 at $1,731.80 an ounce with trading volume set to finish
about 45 percent below its 250-day average, preliminary Reuters
data showed.
    Open interest, which measures the total number of long and
short outstanding contracts, rose to a six-month high at near
450,000 lots following a 2-percent increase on Friday.
   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 weak
U.S. jobs data stoked expectations that the Fed might choose to
use a third round of quantitative easing or print 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, suggesting China is well on its way to overtaking
India as the world's top gold consumer. 
    Palladium, which is used in catalytic converters for
gasoline-powered engines, rose 2.7 percent on the day to $666.50
an ounce to hold around its highest since early May, helped by a
8 percent jump in Chinese car sales figures for August.
    Platinum rose 0.7 percent to $1,593.10 an ounce,
while silver edged down 0.3 percent to $33.56 an ounce.
 2:42 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold DEC   1731.80  -8.70  -0.5  1729.20 1742.30   94,626
 US Silver SEP  33.574 -0.059  -0.2   33.530  33.850      171
 US Plat OCT   1603.80   7.50   0.5  1589.90 1608.80    8,288
 US Pall SEP    672.25  18.25   2.8   654.55  672.40       22
 Gold          1728.97  -6.92  -0.4  1728.08 1739.65         
 Silver         33.560 -0.090  -0.3   33.400  33.950
 Platinum      1593.10  11.40   0.7  1592.00 1603.50
 Palladium      666.50  17.50   2.7   655.00  670.50
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        101,432   138,515   183,316     19.44    0.30
 US Silver       43,124    52,070    53,138     30.53    0.17
 US Platinum      9,981    15,762     9,226        23    0.00
 US Palladium     5,267     7,558     4,647