RTRS:PRECIOUS-Gold steady ahead of U.S. data; drop in SPDR holdings jolts market
* SPDR holdings drop 10.5 T, biggest 1-day fall since July
* Traders await U.S. jobs data for stimulus clues
* Delay in stimulus reduction could support gold prices
(Updates prices)
By A. Ananthalakshmi
SINGAPORE, Oct 22 (Reuters) - Gold traded in a tight range
on Tuesday as the market waited for U.S. economic data but
investor sentiment was undermined by a big drop in holdings in
the largest gold-backed exchange-traded fund.
Holdings in SPDR Gold Trust fell 10.51 tonnes on
Monday to 871.72 tonnes, their lowest since Feb. 2009. It was
the biggest one-day fall in the fund's holdings since early
July.
Its holdings have fallen about 430 tonnes so far this year
and this has been a big contributor to the 21 percent drop in
the gold price in 2013.
Flows from the fund are watched closely as they provide an
insight into the thinking of investors such as U.S. hedge fund
manager John Paulson who have big positions in gold.
"(The) low in the ETF position mirrors a structural
adjustment," said Alexis Garatti, an economist at Haitong
International Research in Hong Kong.
"With quantitative easing policies, excess liquidity boosted
positions in gold but we will soon exit QE, which is why there
is a normalisation now."
Spot gold rose 0.1 percent to $1,316.90 an ounce by
0626 GMT, after ending flat in the previous session.
"The drop (in SPDR holdings) doesn't bode too well for
prices, especially now, when there hasn't been any U.S. data for
a while," said one Hong Kong-based trader.
"However, prices will be range-bound till we get nonfarm
data later today. It should also get some support from talk that
tapering could get delayed into next year," the trader added.
Traders are looking to U.S. nonfarm payrolls data for
September -- due on Tuesday after being delayed by a partial
government shutdown this month -- to gauge the fate of the
Federal Reserve's bond-buying stimulus programme.
Some economists polled by Reuters believed the Fed could
postpone the scaling-back of its $85 billion monthly bond
purchases to next year as budget problems in Washington remain
unresolved.
Last week lawmakers reached only a temporary agreement to
avert a historical debt default, raising the risk of another
government shutdown early next year.
Gold could see some stability for now as the delay in
tapering could increase demand for gold in emerging economies,
said Haitong's Garatti.
