* Dollar stays strong, pulls off earlier 1-mth high vs euro
* Indian jewelry strike continues, denting demand
* U.S. auto sales expected to post strong showing in March
(Updates prices, releads)
By Carole Vaporean and Michelle Martin
NEW YORK/LONDON, April 2 (Reuters) – Gold prices rose on
M onday, firming on technical buying and then seesawing around
$1,680 an ounce, buoyed by technical factors and gains in oil
and equity markets.
Gold also drew support as the euro retraced early losses
after falling to one-month lows against the dollar on weak
European manufacturing data.
Spot gold was up 0.7 percent at $1,679.09 an ounce at
1:18 EDT (1718 GMT), while U.S. gold futures for April
delivery were up $9.20 an ounce at $1,681.10.
The precious metal posted a 6.6 percent rise in the first
quarter after Federal Reserve comments reassured investors that
U.S. interest rates would remain low for an extended period,
keeping the opportunity cost of holding gold low.
Signs of improvement in the U.S. economy have clouded the
picture for gold, as a healthier recovery could make it less
likely that the Federal Reserve will try to juice the economy
with another round of government bond buying, or quantitative
easing.
“The wider macro environment is generally improving … so I
think that’s creating some headwinds, and also the European
banking crisis settled down, so there’s less need for safe haven
of gold at this point,” Standard Chartered analyst Daniel Smith
said.
“But we think that the downside is actually quite limited
from here,” he added. “We think that actually gold will tend to
rally in the months ahead on the back of a wider improvement in
liquidity which we’re seeing across the macrospace.”
Data released on Monday showed the pace of growth in the
U.S. manufacturing sector picked up a tad in March, although
U.S. construction spending in February recorded its largest drop
in seven months.
The dollar index surrendered early gains after the reports,
which boosted gold. Dollar weakness makes assets priced in the
U.S. unit cheaper for buyers using other currencies.
U.S. and European stock markets rose on Monday, meanwhile,
although oil prices slipped.
MONEY MANAGERS LIFT BULLISH BETS
U.S. Commodity Futures Trading Commission figures showed on
Friday that money managers, including hedge funds and other
large speculators, raised their bullish bets in gold for the
first time in four weeks last week.
Speculators in silver also cut bullish exposure, reducing
net length by 3,284 lots to 17,031 contracts – the lowest level
since the week of Jan. 29, when they were long on 16,034 lots.
Jewelers in major gold consumer India remained on strike on
Monday for a 17th day after the finance minister proposed to
double the import duty on gold, an excise duty on unbranded
jewelry and a tax on transactions worth more than 200,000
rupees.
“A recent pull-back in Indian gold demand has forced prices
lower over recent weeks, following the Indian government’s
decision to double the duty payable on gold imports to 4 per
cent and to impose an additional 0.3 per cent tax on most gold
jewelry,” National Australia Bank said in a note.
Spot silver was up 2.8 percent at $33.12 an ounce.
The grey metal broke a three-quarter losing streak in the first
three months of 2012, rising 16 percent on gold’s coat-tails.
Spot platinum was up 0.3 percent at $1,649.24 an
ounce, while spot palladium was up 1.7 percent at $658.97
an ounce.
U.S. auto sales are expected to continue at a strong pace in
March, capping the best quarter in four years for new vehicle
purchases as the overall U.S. economy improved and new car
buyers found easier financing.
Automakers are the biggest consumers of platinum and
palladium, which are widely used in autocatalysts.
Prices at 12:48 p.m. EST (1647 GMT)
LAST NET PCT YTD
CHG CHG CHG
US gold 1681.20 9.30 0.6% 7.3%
US silver 33.125 0.641 2.0% 18.7%
US platinum 1656.50 12.40 0.8% 18.3%
US palladium 662.50 8.40 1.3% 1.0%
Gold 1679.09 11.19 0.7% 7.4%
Silver 33.12 0.91 2.8% 19.6%
Platinum 1649.24 4.24 0.3% 18.4%
Palladium 658.97 10.89 1.7% 1.0%
Gold Fix 1677.50 13.50 0.8% 6.5%
Silver Fix 32.42 -1.00 0.0% 15.0%
Platinum Fix 1641.00 5.00 0.3% 18.8%
Palladium Fix 656.00 0.00 0.0% 3.1%
(Editing by Alison Birrane; Editing by David Gregorio)
