RTRS:PRECIOUS-Gold bounces as Asian stocks dive; premiums steady
* Bargain hunters buy on dips, gold still below record
* Premiums for gold bars steady in Hong Kong, Singapore
* Coming Up: U.S. non-farm payrolls July; 1230 GMT
(Adds premiums; activity in physical market)
By Lewa Pardomuan
SINGAPORE, Aug 5 (Reuters) - Gold edged up on Friday as
investors used bullion to shelter from the storm engulfing
financial markets on concerns that the United States may be
facing another recession and Europe's debt crisis is spreading
to some of its largest economies.
Gold fell as much as $40 an ounce from a record high on
Thursday because investors needed to sell the precious metal to
cover losses in other asset classes, but the decline in prices
as well as tumbling equities spurred bargain hunting.
Spot gold rose 0.35 percent to $1,653.59 an ounce by
0431 GMT, having hit a low of around $1,641. Bullion struck a
record around $1,681 an ounce on Thursday before losing much of
the gains.
"I don't hear anybody saying that the bears are coming,"
said Ronald Leung, director of Lee Cheong Gold Dealers in Hong
Kong.
"The market has dropped down too much, so bargain hunters
are buying a little bit at the lower end. There doesn't seem to
be too much change in sentiment."
The Nikkei fell to its lowest since its post-quake plunge
in March after U.S. stocks slipped on worries about the global
economy, but the index later stabilised as foreign investors
appeared to have finished lightening their portfolios.
In the physical market, premiums for gold bars were steady
at 50 cents to $1 to the spot London prices in Hong Kong, while
in Singapore, the value was little changed at as much as 80
cents.
"Investors are more interested in playing the spread now. I
mean, they are buying gold at around $1,640s and selling it at
around $1,650s. I do see physical demand from jewellers,
although the amount is not big," said a dealer in Singapore.
"Premiums are still unchanged at 20 to 80 cents, depending
on the brand."
Bullion prices have risen more than 15 percent this year.
The need for investors to book those profits and boost liquidity
may force prices lower in the next few days.
"Bullish sentiment in gold could be tempered as wary
short-term investors look to take profits," said Ong Yi Ling, an
investment analyst at Phillip Futures.
"Investors will be watching the all-important non-farm
payrolls data that we will be getting today and whether the
figures turn up worse than expected. It seems everyone is
bracing for the worst."
U.S. economic data suggests growth in the world's largest
economy was slowing from what was already a sluggish pace even
before politicians agreed budget cuts. Investors await data
later on Friday on U.S. jobs growth for July, which may show the
impact of the political stand-off on debt.
Europe's debt crisis is threatening to swallow two of the
continent's largest economies, Italy and Spain. European
policymakers tried to turn a more powerful fire hose on the euro
zone debt crisis on Thursday but financial markets were
unimpressed with their response.
With few other places to go the metal still looks attractive
to investors trying to maintain the value of their capital.
Citing enhanced contagion risk from the European debt
crisis, Morgan Stanley lifted its 2011 gold price forecast to
$1,511 an ounce from $1,401 and raised this year's silver price
forecast to $36.21 an ounce from $31.39.
While spot gold rose, U.S. gold futures GCcv1 fell $1.5 to
$1,657.5 an ounce -- nearly $30 off Thursday's record around
$1,684 an ounce. They had dropped as low as $1,644.2 on Friday.
Oil markets were headed for their biggest weekly loss in
three months on Friday on fears that a slower economy would mean
less demand for fuel. The losses have erased oil's gains this
year.
Base metals also dropped, with the most-active October
copper contract on the Shanghai Futures Exchange SCFcv1 down
more than 3 percent in early trading on Friday, catching up with
overnight losses in London.
