RTRS: PRECIOUS-Gold bounces after 1 pct fall; jewellers buy
By Lewa Pardomuan
SINGAPORE, June 14 (Reuters) - Gold rebounded on Tuesday
after posting its biggest one-day loss in a month in the
previous session on growing worries about another global
economic downturn, but a weaker U.S. dollar and bargain hunting
by jewellers offered support.
While industrial metals priced in expectations of a cooling
Chinese economy, dealers see no change in China's appetite for
bullion. Investors were awaiting a trail of U.S. data later in
the day which could set the tone for commodities.
Gold added $6.26 to $1,520.99 an ounce by 0606 GMT,
snapping a two-day drop. Gold, which hit a record around $1,575
in early May, has been buoyed by uncertainties about the outlook
for the U.S. economy and worries about euro zone debt.
"I would say gold is still bullish. The main factors are
still going back to the monetary policy of the U.S. and the
longer-term weakness of the dollar. That could boost gold prices
and help it head towards a new record later this year," said a
dealer in Singapore.
"The demand for gold in China is going to come pretty robust
this year. Despite the slowing economic growth, I think the
Chinese will continue to consume quite a bit of gold," he said.
China's inflation accelerated in May to a 34-month high of
5.5 percent, supporting the case for a tightening in monetary
policy as soon as this month even as there are signs that
economic growth is slowing down.
But Chinese demand for gold bars and coins as private
investments could push bullion imports above 400 tonnes in 2011,
triggered by concerns about inflation and poor returns in stocks
and the property sector.
The United States will release key data on Tuesday,
including retail and auto sales, and producer prices, which the
market will scour for clues to the magnitude and duration of the
slowdown in the world's largest economy.
U.S. economic growth could remain soft for some time but
monetary policy may not be able to address the problem, Richmond
Federal Reserve Bank President Jeffrey Lacker said.
Gold's recent fall spurred activity in the physical sector.
"We're seeing a little bit of physical buying. It's from
jewellery makers," said Ronald Leung, director of Lee Cheong
Gold Dealers in Hong Kong.
"I think we can say gold will try the lower end first, and
then maybe $1,480 should be a good support. Starting in August
or September, there may be room to go up again."
Swiss franc held near a record high against the euro
, benefiting from lingering European debt crisis and
being viewed as one of the few major currencies not suffering
from debt troubles or the currency debasement of quantitative
easing.
On Monday, Standard & Poor's slashed Greece's rating to CCC,
making the highly-indebted country its lowest-rated in the
world. S&P said European policymakers look increasingly likely
to impose a restructuring of Greece's debt.
"Now that the euro zone has its problems, the U.S.
has its budget deficit, I think Swiss franc is one of the safe
havens that investors would look towards. But I would not see
Swiss franc as competing with gold per se," said the dealer in
Singapore.
"It would be competing with other currencies."
The dollar index , which tracks its performance
against a basket of major currencies, was down a smidgen at
74.488, off a two-week high of 74.960 struck the previous day.
Silver , which usually tracks gold, rose 40 cents to
$35.09 an ounce, below a record at $49.51 an ounce hit in April.
Holdings of the largest silver-backed exchange-traded-fund
(ETF), New York's iShares Silver Trust , fell 2.1 percent
from Friday to Monday, while the largest gold-backed ETF, New
York's SPDR Gold Trust saw its holdings dip 0.08 percent
during the same period.
In the energy market, oil rebounded after China said
industrial production grew at a faster-than-expected pace in
May, easing concerns over a global economic slowdown and
soothing worries that Europe's debt crisis would dent energy
demand.
Precious metals prices 0606 GMT
