PRECIOUS-Gold hits 2-1/2-week high on Cyprus bailout plan

Mon Mar 18, 2013 12:44am GMT

SINGAPORE, March 18 (Reuters) - Gold rose above $1,600 for
the first time in more than two weeks on Monday as an unusual
bailout package for Cyprus threatened to trigger fresh turmoil
in the euro zone, attracting investors to seek safety in gold.
    
    FUNDAMENTALS
    * Spot gold rose to a 2-1/2-week high of $1,608.30 an
ounce earlier in the day, before easing to $1,600.96 by 0024
GMT, up 0.6 percent from the previous close.
    * U.S. gold also hit a 2-1/2-week high, at $1,607.6
an ounce, and pared some gains to $1,600.10.
    * The euro zone agreed on Saturday to hand Cyprus a bailout
worth 10 billion euros ($13 billion), but forced the country's
depositors to pay up to 10 percent on their savings despite the
risk of a wider run on savings. 
    * Investors will closely watch a U.S. Federal Reserve policy
meeting on Tuesday and Wednesday to assess the central bank's
attitude towards aggressive monetary stimulus. Economists
expected the Fed to keep buying bonds for the rest of the year
to aid the still frail economic recovery. 
    * Speculators raised net long positions in U.S. gold by 9
percent in the week to March 12 from a more than five-year low
of 39,631 contracts to 43,195 contracts, data from U.S.
Commodity Futures Trading Commission showed. 
    * But speculators' short positions in gold continued to
increase, up nearly 2 percent from a week earlier to 70,126
contracts, the highest since at least 2006. 
    * Holdings of SPDR Gold Trust, the world's biggest
gold-backed exchange-traded fund, fell 3.311 tonnes to 1,232.996
tonnes on Friday, the lowest since October 2011.
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    MARKET NEWS
    * U.S. stocks slipped on Friday, ending the Dow Jones
industrial average's longest winning streak since 1996 as
investors paused just below the S&P 500's record high. 
    * The euro skidded lower in Asia on Monday as surprise news
that Cyprus would have to tax depositors as part of a bailout
plan was taken as setting a dangerous precedent that at worst
could ultimately risk bank runs elsewhere in the region. 
        
    DATA/EVENTS (GMT)
 1000  EZ   Eurostat trade nsa, EUR   Jan 2013                  
 1400  U.S. NAHB housing market indx  Mar                       
       
    PRICES
 Precious metals prices 0024 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1600.96    9.12   +0.57     -4.39
  Spot Silver        28.95    0.28   +0.98     -4.39
  Spot Platinum    1578.99  -22.01   -1.37      2.87
  Spot Palladium    758.97   -9.03   -1.18      9.68
  COMEX GOLD APR3  1600.10    7.50   +0.47     -4.52        13176
  COMEX SILVER MAY3  28.92    0.07   +0.24     -4.33         2755
  Euro/Dollar       1.2905
  Dollar/Yen         94.94
  COMEX gold and silver contracts show the most active months
 
 (Reporting by Rujun Shen; Editing by Himani Sarkar)