PRECIOUS-Gold stays off 4-1/2 mth low on Asia physical buying

Wed Jan 9, 2013 7:48am GMT

* Gold tests 200-day moving average
    * Spot gold could fall to $1,624.14/oz -technicals
    * Coming up: Germany industrial output, Nov; 1100 GMT

 (Updates prices)
    By Rujun Shen
    SINGAPORE, Jan 9 (Reuters) - Gold held around $1,660 an
ounce on Wednesday as investors awaited policy decisions by
central banks in Japan and the euro zone, while physical buying
interest from Asia helped support sentiment.
    Gold fell to a more than four-month low below $1,630 an
ounce last week after investors were spooked by minutes from the
latest U.S. Federal Reserve policy meeting, which showed
concerns about the side effects of quantitative easing.
    Monetary stimulus measures taken by central banks in the
United States and Europe helped drive gold to its twelfth year
of gains in 2012, as investors worried about the debasement of
paper currency fled to hard assets.
    The Bank of Japan will consider easing monetary policy again
this month, while the European Central Bank is expected to keep
interest rates unchanged at a meeting on Thursday.
  
    Analysts said last week's sell-off was overdone, as there
have been no clear signals the Fed will scale down or stop its
bond purchasing programme any time soon.
    "One clear signal for gold to sell off is if we see real
rates go higher," said Dominic Schnider, an analyst at UBS
Wealth Management in Singapore. "But that's not for now."
    Schnider said lower-than-expected inflation globally last
year, especially in the last quarter, made gold less attractive
to investors, who had become seemingly immune to repeated rounds
of quantitative easing.
    Spot gold had inched up 0.2 percent to $1,661.50 by
0721 GMT, attempting to hold steady above its 200-day moving
average at $1,660.95.
    U.S. gold was little changed at $1,661.80.
    Technical analysis suggested spot gold could drop to
$1,642.14 an ounce, as it looks weak when approaching resistance
at $1,660, said Reuters market analyst Wang Tao. 
    
    
    Strong physical buying interest from Asian countries,
including top two gold consumers India and China, is likely to
keep supporting gold prices, although the lack of fresh momentum
will make it hard for gold to push significantly higher, traders
and analysts said. 
    "Gold will probably trade in a broad range of $1,625 to
$1,675 in the next few weeks," said a Singapore-based trader.
    Premiums on gold shipments to India jumped to their highest
level in two months on Tuesday as traders rushed to place orders
for the metal ahead of an expected rise in import duty, even as
gold refiners overseas hurried to keep pace. 
    Holdings of iShares Silver Trust, the world's biggest
silver-backed exchange-traded fund, rose to 10,112.22 tonnes on
Jan 7, the highest since May 2011. 
    Spot silver rose 0.2 percent to $30.42, after rising
more than 9 percent in 2012.
    
      Precious metals prices 0721 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1661.50    2.90   +0.17     -0.78
  Spot Silver        30.42    0.07   +0.23      0.46
  Spot Platinum    1576.50    2.80   +0.18      2.70
  Spot Palladium    672.52    4.42   +0.66     -2.82
  COMEX GOLD FEB3  1661.80   -0.40   -0.02     -0.84        16401
  COMEX SILVER MAR3  30.44   -0.02   -0.08      0.69         3891
  Euro/Dollar       1.3085
  Dollar/Yen         87.43
  COMEX gold and silver contracts show the most active months
 
 (Editing by Richard Pullin and Joseph Radford)