RTRS:PRECIOUS-Gold reverses losses in choppy Asian trading; Fed stimulus in focus
* U.S. gold futures rebound from over 1 pct drop
* Prices recover as stops hit, silver gains on China factory
survey
* China back from holiday; buying interest low -traders
(Adds trader comments, updates prices)
By A. Ananthalakshmi
SINGAPORE, Sept 23 (Reuters) - Gold reversed early losses on
Monday as buyers emerged following a sell-off triggered by
renewed fears that the U.S. Federal Reserve will begin tapering
its bullion-friendly stimulus measures before the end of the
year.
Gold fell nearly 1 percent earlier in the session,
adding to a 3-percent fall on Friday. Silver also
recovered sharply from early trade after strong numbers in a
preliminary survey of China's factory sector boosted the metal,
which has industrial uses, helping gold.
"A lot of stops are being targeted right now," said one
precious metals trader in Sydney. "Trading today has been as
volatile and choppy as it could be in the Asian time zone."
Another trader in Hong Kong said stops were triggered after
gold prices slowly recovered to Friday's closing price from a
drop in early trade.
Spot gold had risen 0.05 percent to $1,325.71 an
ounce at 0703 GMT, after falling to as low as $1,313.65. Spot
gold lost nearly 3 percent on Friday.
U.S. gold futures fell as much as 1.4 percent, while
silver futures dropped 2.9 percent before paring some
losses.
After a surprise decision by the Fed last week to stick to
its bond-buying stimulus, St. Louis Fed President James Bullard
said on Friday that the U.S. central bank could still scale back
the stimulus at an October meeting should data point to a
stronger economy.
Gold, often seen as an inflation-hedge and a safe-haven
investment, is highly sensitive to the fate of the stimulus
which propelled it to record highs in 2011.
A Reuters poll of economists showed that many expected the
Fed to taper bond purchases only in December. Forty-two of 61
economists said the Fed would now taper in December, the last
chance for policymakers to follow through on Fed Chairman Ben
Bernanke's earlier guidance.
"The Fed will not reduce immediately considering they
downgraded their views about the economy in the
(September)meeting," said Chen Min, precious metals analyst at
Jinrui Futures in Shenzhen. "The next possible window is in
December."
Hedge funds and money managers slashed bullish bets in
futures and options of U.S. gold and silver markets, while
holdings in SPDR Gold Trust fell nearly 2 tonnes.
Weak buying from major consumer China, which was back from
the mid-autumn festival holiday, weighed on prices earlier in
the day.
"We can see some buying interest from them only if prices
fall below $1,300 and stay above $1,250," said one dealer.
