PRECIOUS-Gold down but outperforms crude in commods sell-off

Mon Sep 17, 2012 9:11pm BST

* Bullion's safe-haven appeal limit losses
    * Crude plunges, grains down sharply
    * Asian physical demand, gold ETF buying strong

 (Updates comment, market activity)
    By Frank Tang
    NEW YORK, Sept 17 (Reuters) - Gold fell on Monday,
outperforming tumbling crude oil and grain markets as economic
uncertainty related to last week's monetary stimulus unleashed
by U.S. Federal Reserve boosted the metal's safe-haven appeal.
    The metal, a traditional inflation hedge, was down less than
1 percent even though oil plunged more than $5 in a few minutes
on Monday afternoon in a rapid selloff and grain prices led by
soybean futures slid.  
    "Despite large-scale commodities liquidation, gold is
supported in the high $1,700 range in a flight to quality," said
Zachary Oxman, portfolio manager at futures brokerage TrendMax. 
    "This suggests there is a worry that inflation and
devaluation of currencies due to central-bank actions are
problematic."
    Spot gold fell 0.7 percent to $1,757.69 an ounce by
3:34 p.m. EDT (1934 GMT), having risen by 2 percent last week.
    The metal has gained around 10 percent since late August on
hopes that central bank stimulus around the world would revive a
stagnant global economy.
    U.S. COMEX gold futures for December delivery settled
down $2.10 at $1,770.60 an ounce, with trading volume at about
40 percent below its 250-day average, preliminary Reuters data
showed.
    
    PHYSICAL, INVESTMENT DEMAND STRONG  
    Bullion largely traded flat before crude oil's sudden drop.
A third round of bullion-friendly Fed bond-buying known as
quantitative easing (QE), underpinned the metal - a traditional
inflation hedge - to a fourth straight week of gain last week.  
 
    "Using QE2 as guidance for potential gains for gold prices,
gold is likely to have priced in the bulk of its move higher,"
said Suki Cooper, precious metals analyst at Barclays Capital.
    Cooper said that, however, a pick-up in physical demand in
China and India and record-high holdings in gold-backed
exchange-traded products suggest the metal is likely to hold
onto its recent strength
    Analysts said the U.S. central bank's unprecedented move to
tie in monetary stimulus to economic conditions should benefit
gold. 
    A Reuters poll showed the Fed will buy a total of $600
billion of bonds under its new stimulus program and will look
for a U.S. unemployment rate of 7 percent before it halts the
program. 
    Among other precious metals, silver fell 1.7 percent
at $34.01 an ounce. Platinum dropped 1.9 percent to
$1,662.74 an ounce, while palladium tumbled 3.3 percent
to $674.20.
 3:34 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold DEC   1770.60  -2.10  -0.1  1756.20 1778.90  108,301
 US Silver DEC  34.367 -0.289  -0.8   33.845  34.940   40,738
 US Plat OCT   1672.60 -41.10  -2.4  1662.90 1716.00   14,064
 US Pall DEC    689.10 -10.20  -1.5   677.80  700.90    4,194
                                                               
 Gold          1757.69 -11.77  -0.7  1755.00 1776.26         
 Silver         34.010 -0.580  -1.7   33.840  34.850
 Platinum      1662.74 -32.26  -1.9  1668.00 1712.00
 Palladium      674.20 -22.80  -3.3   680.02  698.00
                                                               
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        114,670   137,222   183,973      17.6   -0.85
 US Silver       44,420    55,788    53,593     30.24   -3.72
 US Platinum     16,447    17,019     9,341     25.22    0.12
 US Palladium     4,234     7,907     4,657                  
                                                               
 
 (Additional reporting by Amanda Cooper in London; Editing by
Marguerita Choy and Andre Grenon)