PRECIOUS-Gold up, faces headwind from Wall Street rally

Wed Mar 6, 2013 8:11pm GMT

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* Gold up as Wall St climbs for 2nd day, dollar rises
    * Upbeat US jobs, factory data, Fed survey paint bright
outlook
    * South Korea's central bank buys 20 tonnes of gold in Feb.
    * Coming up: US jobless claims and productivity Thursday


    By Frank Tang and Natalie Huet
    NEW YORK/LONDON, March 6 (Reuters) - Gold rose on Wednesday,
but analysts expect the breakout in Wall Street stocks to new
highs and data showing an improving U.S. economy to pressure the
precious metal's safe-haven appeal.
    News of another gold purchase by South Korea's central bank
last month and hopes that outflow in gold-backed exchange-traded
funds will peter out soon gave support. Bullion has now risen
for a second day after its four-session losing streak. 
    The U.S. equities market resumed its climb into uncharted
territory, with the Dow setting an intraday record for a
second session on encouraging jobs and factory data. An
extensive survey by the Federal Reserve's regional branches
showing continued economic growth in January also boosted the
stock market.  
    "You are going to get less people interested in defensive
plays like the precious metals. People are more into buying
equities in a risk-on type environment," said Phillip Streible,
senior commodities broker at futures brokerage RJ O'Brien.
    Spot gold was up 0.4 percent at $1,580.70 an ounce by
2:42 p.m. EST (1942 GMT), moving in a narrow range of less than
$20.
    Bullion prices are down nearly 6 percent so far this year
and down about 18 percent from a record high of $1,920.30 an
ounce hit in September 2011.
    U.S. COMEX gold futures for April delivery settled
unchanged from Tuesday's close at $1,574.90, with trading volume
about 20 percent below its 30-day average, preliminary Reuters
data showed. 
    The metal reversed early losses and appeared to find support
near Friday's low at around $1,565.
    Gold was underpinned as deflationary worries eased after the
U.S. House of Representatives passed legislation to keep federal
funds flowing to government agencies through Sept. 30, seeking
to avert shutdowns that otherwise would begin on March 27 when
current funding expires. 
    Bullion rebounded into the headwind of a strong dollar,
which benefited from a falling euro on speculation about future
interest-rate cuts a day before a European Central Bank
policy-setting meeting. 
    The ECB, the Bank of England and the Bank of Japan are all
expected to stick to ultra-easy monetary policy at meetings on
Thursday, following assurances by Federal Reserve officials that
their stimulus program remains in place.
    Silver rose 0.8 percent to $28.90 an ounce.
    
    SOUTH KOREA BUYS GOLD
    Official-sector gold buying this year has helped offset
lackluster investor interest. 
    South Korea's central bank bought 20 tonnes of gold in
February in the fifth purchase of the metal in less than two
years, taking total holdings to 104.4 tonnes. 
    But continued outflows from gold-backed exchange-traded
funds underscored sober investor sentiment for the metal.
    Bullion holdings in the SPDR Gold Trust, the world's
biggest gold ETF, fell for an 11th session on Tuesday to a
16-month low of 1,244.855 tonnes. 
    Among other precious metals, platinum eased 0.4
percent to $1,579.99 an ounce, while palladium gained 1.3
percent to $742.72 an ounce.
 2:42 PM EST     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold APR   1574.90   0.00   0.0  1566.40 1584.30  154,258
 US Silver MAY  28.803  0.199   0.7   28.520  29.140   35,617
 US Plat APR   1579.80  -5.90  -0.4  1574.50 1603.00   10,469
 US Pall JUN    740.05   5.45   0.7   737.55  746.70    3,162
                                                               
 Gold          1580.70   5.64   0.4  1568.23 1584.40         
 Silver         28.900  0.240   0.8   28.590  29.060
 Platinum      1579.99  -5.76  -0.4  1579.25 1600.25
 Palladium      742.72   9.25   1.3   738.50  743.00
                                                               
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        168,276   203,578   175,860     14.74   -0.39
 US Silver       38,306    64,311    52,920     23.47   -0.41
 US Platinum     10,773    13,553    10,852     18.93    0.58
 US Palladium     3,534     9,054     5,263
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