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PRECIOUS-Gold gains modestly from 2-1/2 month low on physical buying
September 4, 2014 / 4:16 AM / 3 years ago

PRECIOUS-Gold gains modestly from 2-1/2 month low on physical buying

* Gold ticks up on technical, physical buying
    * Physical buying in Asia picking up - trader
    * Coming Up: European Central Bank meeting

 (Updates prices)
    By A. Ananthalakshmi
    SINGAPORE, Sept 4 (Reuters) - Gold inched up on Thursday on
technical and physical buying interest in Asia, but prices
continued to hover near a 2-1/2 month low as brighter prospects
for the U.S. economy and the dollar dimmed the metal's appeal. 
    Investors were waiting for a European Central Bank meeting
later in the day to see whether it will deliver a fresh round of
policy stimulus, and its impact on the euro and the dollar.  
    Spot gold rose 0.1 percent to $1,270.10 an ounce by
0643 GMT. The metal fell to a low of $1,261.19 on Wednesday, its
weakest since mid-June, before closing with a small gain.
    "There is some technical buying after gold prices failed to
retain losses below $1,265," said a precious metals trader in
Hong Kong. "We can see some fresh buying interest in the
$1,260-$1,270 range. Physical buying from Asia is also
supporting."
    Gold, seen as an alternative investment during times of
geopolitical and financial uncertainties, has gained about 5
percent this year amid tensions in Ukraine and the Middle East.
    But bullion investors continue to worry over strong U.S.
economic data and its impact on the dollar. 
    In recent days, a string of encouraging U.S. economic data,
along with a sell-off in the euro and the yen, has boosted the
dollar. A stronger greenback hurts dollar-denominated gold as it
makes the metal more expensive for holders of other currencies.
  
    SPDR Gold Trust, the world's largest gold-backed
exchange-traded fund and a good measure of investor sentiment,
said its holdings fell 2.69 tonnes to 790.51 tonnes on
Wednesday. 
    U.S. nonfarm payrolls data due on Friday will be closely
watched for further clues about the economy and the outlook for
the Federal Reserve's monetary stimulus. 
    On Thursday, all eyes will be on the ECB policy meet. The
ECB is under strong pressure to tackle stubbornly low inflation
at a time when the conflict in Ukraine threatens to destabilise
the region's fragile recovery. 
    The euro on Wednesday recovered modestly from one-year lows
against the dollar, but traders said euro bears were just taking
a breather ahead of the ECB meet. Any further weakening of the
euro would hurt gold. 
    "The ECB meeting is more likely to be gold-bearish than
gold-bullish," HSBC analysts said in a note. "Gold is likely to
be more influenced by U.S unemployment data due at the end of
the week and the general direction of the dollar."
    Among other precious metals, platinum and palladium
 - used in auto manufacturing - gained as U.S. August auto
sales were the highest for that month in more than a decade. 
    
    PRICES AT 0643 GMT    
 Metal            Last      Change   Pct chg
                                     
 Spot gold          1270.1     1.53      0.12
 Spot silver         19.16     0.03      0.16
 Spot platinum        1410      8.4       0.6
 Spot palladium      877.6        6      0.69
 Comex gold         1271.3        1      0.08
 Comex silver       19.205    0.016      0.08
 Euro               1.3142                   
 DXY                82.916                   
                                     
 COMEX gold and silver contracts show the
 most active months
 
 (Editing by Himani Sarkar and Prateek Chatterjee)

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