* Encouraging U.S. data dashes US easing hopes
* Gold’s loss snaps five-day rise
* PGM mixed as markets digest US auto sales
* Coming up: US factory orders Wednesday
(Adds details, updates market activity)
By Frank Tang and Amanda Cooper
NEW YORK/LONDON, May 1 (Reuters) – Gold fell on Tuesday,
snapping a five-day winning streak as better-than-expected U.S.
manufacturing data further diminished chances of additional U.S.
monetary easing and the precious metal’s investment appeal.
With most markets in Europe and several major Asian markets
closed for the May Day holiday, investors shifted their
attention to the Institute for Supply Management’s April index
of U.S. factory activity, which rose to 54.8, the strongest in
10 months, from 53.4 in March.
The metal has lost $125 since Feb 28 after a strong run of
U.S. economic indicators dashed hopes of Fed easing that could
have provided an underpinning for gold. It posted a small loss
in April which marked the first time since 2000 it fell three
months in a row.
Gold is still up 6 percent year to date, after the U.S.
central bank said in January it would keep interest rates near
zero until at least 2014 to stimulate economic growth
“The better the economic number, the lower the chance that
we are going to see lower U.S. rates through 2014,” said David
Meger, director of metals trading of Vision Financial.
Spot gold was down 0.1 percent at $1,663.11 an ounce
by 3:11 p.m. EDT (1911 GMT). Tuesday’s loss ended the metal’s
five-day rally which saw prices climb 1.6 percent.
U.S. gold futures for June delivery settled down
$1.80 at $1,662.40. Trading volume was about 30 percent below
its 30-day average, preliminary Reuters data showed.
On charts, gold’s repeated failure to rise above key
resistance at its 100-day moving average dampened sentiment
among momentum traders. The metal briefly rose above that level
on Tuesday but ended about $5 below it.
Still, investor demand remained resilient as holdings for
the yellow metal in exchange-traded products posted their
largest one-day net inflow in a month on Monday.
FED WATCH
A recent spate of soft U.S. data revived some expectations
that the Fed would offer additional support to the economy via a
third round of quantitative easing, or purchases of government
bonds to anchor market interest rates.
Gold benefits from low interest rates as it increases its
appeal against other interest-yielding assets. Loose monetary
policy could also create a pick-up in inflationary pressures,
something gold can help portfolio managers guard against.
However, Philadelphia Federal Reserve President Charles
Plosser said the Fed may need to rethink its conditional promise
to hold rates at rock-bottom levels until late 2014.
Platinum group metals investors are digesting news General
Motors Co and Ford Motor Co both reported a
smaller-than-expected decline in U.S. new vehicle sales in
April. GM, the largest U.S. automaker, raised its full-year
forecast for the industry due to a strengthening economy.
Platinum was up 0.3 percent on the day at $1,566.80
an ounce, while palladium edged down 0.2 percent at
$676.75 an ounce.
Silver inched down 0.1 percent on the day at $30.96
an ounce.
3:11 PM EDT LAST/ NET PCT LOW HIGH CURRENT
SETTLE CHNG CHNG VOL
US Gold JUN 1662.40 -1.80 -0.1 1657.50 1672.30 97,119
US Silver MAY 30.877 -0.082 -0.3 30.765 31.280 857
US Plat JUL 1572.30 0.40 0.0 1560.40 1578.60 5,018
US Pall JUN 681.05 -1.30 -0.2 675.90 686.20 1,900
Gold 1663.11 -0.97 -0.1 1658.10 1671.20
Silver 30.960 -0.040 -0.1 30.800 31.320
Platinum 1566.80 5.05 0.3 1562.50 1572.99
Palladium 676.75 -1.35 -0.2 678.08 683.50
TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG
US Gold 118,020 167,647 195,893 16.83 -0.74
US Silver 25,329 55,758 64,288 25.83 0.28
US Platinum 5,085 7,518 8,319 19 0.00
US Palladium 2,274 2,938 4,671
(Additional reporting by Rujun Shen in Singapore; Editing by
Alden Bentley and Sofina Mirza-Reid)
