RTRS:PRECIOUS-Gold climbs as equities ease after weak China data
* Spot gold gains as much as 1.2 pct, Comex gold up 2 pct
* Stocks ease; China official PMI slips
* Barclays cuts price forecast, citing weak demand
(Adds comments on physical demand, updates prices)
By A. Ananthalakshmi
SINGAPORE, July 1 (Reuters) - Gold gained 1 percent on
Monday after posting its biggest quarterly fall ever, as bearish
economic data from China hurt Asian stocks and boosted bullion's
safe-haven appeal.
Comments from a U.S. Federal Reserve official on the need to
maintain the bank's stimulus measures for longer also helped
gold recover some losses from last week when it fell 5 percent
to three-year lows.
Investor confidence in the metal has been eroded after it
plunged 23 percent in April-June, as fears over an early end to
the Fed's $85 billion monthly bond purchases hurt gold's appeal
as an inflation hedge.
"What really needs to happen now for gold to regain the
trust of investors is that at the very least it needs to
consolidate for a few days and gain a little bit more
credibility," said a precious metals trader in Hong Kong.
Spot gold rose 0.75 percent to $1,242.40 an ounce by
0644 GMT, while Comex gold rose about $18 to $1,241.80.
Gold fell below $1,200 an ounce last week for the first time
since 2010.
Outflows from gold backed exchange-traded funds (ETFs) have
accelerated due to the recent decline in prices. Outflows from
SPDR Gold Trust, the largest gold ETF, have totalled
nearly 13 million ounces so far this year.
"Every time prices try to come back, there seems to be
steady selling coming out of the West," the trader said.
Hedge funds and money managers slashed their bullish bets in
gold futures and options to their lowest levels in six years, as
bullion prices fell to a three-year low, a report by the
Commodity Futures Trading Commission showed on Friday.
San Francisco Federal Reserve Bank President John Williams
said on Friday he had backed off from his earlier view that the
Fed should start cutting back on stimulus this summer in part
because inflation has been lower than he expected.
Asian equities edged lower on Monday after China's factory
activity reached its lowest in nine months in June, deepening
worries about the world's second-largest economy.
WEAK PHYSICAL DEMAND
Despite gold prices being close to three-year lows, strong
physical demand from India and China - the top two gold
consumers - has failed to materialize.
In April, Asian demand helped cap some of the metal's losses
when prices fell the most in 30 years. However, this time demand
has not picked up to the same levels, dealers and traders have
said.
Barclays cut its forecast for gold prices on Monday, citing
weak demand and ETF outflows.
"While the physical market was able to suspend the downward
trajectory of gold in April following hefty disinvestment, this
time, preliminary data suggest a much weaker physical market
footing," Barclays analysts said in a note.
Sales of American Eagle gold bullion coins plunged to 57,000
ounces in June, the lowest sales since August last year, as
physical demand from retail investors and collectors sank,
according to data on the U.S. Mint's website on Friday.
