* U.S. initial jobless claims rise by more than expected
* Gold's initial rally fizzles as stock losses deepen
* Coming up: Chicago Fed index due Monday
(Recasts, updates prices, adds comments, second
byline/dateline)
By Frank Tang and Jan Harvey
NEW YORL/LONDON, Aug 19 (Reuters) - Gold prices trimmed
gains but stayed higher on Thursday, as investors raised cash
to cover equity-market losses after an initial rally driven by
disappointing U.S. jobless claims data fizzled.
Silver and platinum group metals weakened after data showed
new claims for U.S. unemployment benefits unexpectedly climbed
to a nine-month high last week, and as the Philadelphia Federal
Reserve Bank said regional factory activity unexpectedly
contracted in August. []
Bruce Dunn, vice president of trading at New Jersey-based
Auramet Trading, said that bullion's early gains were driven by
technical buying, but light trading volume suggested it did not
take many buyers for prices to rally.
"And the Philly Fed came out weaker than expected,
pressuring all the industrial metals. The gold bulls became
panicked and squared positions as the European trading ended,"
Dunn said.
Gold initially jumped on the data in a flight to quality,
but the rally faded as losses in U.S. stocks deepened,
prompting investors to sell gold to cover margin calls as stock
prices accelerated losses. S&P 500 index dropped about 2
percent.
Spot gold <XAU=> was at $1,232.15 an ounce at 12:44 p.m.
EDT (1644 GMT), against $1,227.55 late in New York on
Wednesday. U.S. gold futures for December delivery <GCZ0> rose
$2.70 to $1,234.10.
Turnover in COMEX gold futures remained quiet in the summer
months, near a one-year low set on Tuesday, preliminary Reuters
data showed.
The metal is on track to extend a rally to a sixth day on
strong physical demand, which tends to rise in August as
jewelers stockpile inventory ahead of the start of top consumer
India's wedding season.
The weak jobs data fueled interest in the metal as a safe
haven from economic uncertainty in earlier trade, analysts
said.
"The latest economic data have disappointed, raising
concerns once again about the solidity of the recovery," said
Anne-Laure Tremblay, an analyst at BNP Paribas. "This
uncertainty in turn supports the gold price."
The dollar was lower against a basket of currencies in the
wake of the data, which showed initial state jobless benefit
claims rose to a nine-month high last week. The U.S. dollar
later turned higher.
Concerns over the prospect of sluggish growth have raised
investors' appetite for bullion as a haven from uncertainty in
the wider markets. This has been reflected in a rise in
holdings of the world's largest gold exchange-traded fund.
ETF HOLDINGS RISE
New York's SPDR Gold Trust <GLD> said its holdings on
Wednesday rose just under 1 tonne to 1,295.516 tonnes, their
highest since July 27. []
ETF Securities, a London-based provider of exchange-traded
products backed by precious metals, meanwhile said in a weekly
report that inflows into its physically backed gold products
had hit a 13-week high.
The technical outlook for gold is also looking more
positive after the metal's recent gains, analysts said,
although strong pockets of resistance remain.
"Having broken through daily cloud resistance earlier in
the week, a retracement level at $1,242 could be tough to break
in the near term," said Barclays Capital in a note.
Among other precious metals, silver <XAG=> was at $18.30 an
ounce against $18.32, platinum <XPT=> was at $1,521.35 an ounce
versus $1,527 and palladium <XPD=> at $484.05 versus $486.50.
The ratio of platinum to gold -- or how many ounces of gold
were needed to buy an ounce of platinum -- fell to a 1-1/2
month low at 1.24 on Thursday, as the yellow metal's rise made
it comparatively more expensive.
Prices at 12:40 p.m. EDT (1640 GMT)
LAST NET PCT YTD
CHG CHG CHG
US gold <GCZ0> 1234.70 3.30 0.3% 12.6%
US silver <SIU0> 18.335 -0.064 -0.4% 8.8%
US platinum <PLV0> 1528.20 -8.30 -0.5% 3.9%
US palladium <PAU0> 487.95 -2.45 -0.5% 19.3%
Gold <XAU=> 1232.45 5.00 0.4% 12.4%
Silver <XAG=> 18.29 -0.03 -0.2% 8.6%
Platinum <XPT=> 1521.10 -5.90 -0.4% 3.8%
Palladium <XPD=> 484.10 -2.40 -0.5% 19.4%
Gold Fix <XAUFIX=> 1233.50 5.50 0.4% 11.7%
Silver Fix <XAGFIX=> 18.45 9.00 0.5% 8.6%
Platinum Fix <XPTFIX=> 1540.00 4.00 0.3% 5.0%
Palladium Fix <XPDFIX=> 494.00 5.00 1.0% 22.9%
(Reporting by Frank Tang in New York and Jan Harvey in London;
Editing by Marguerita Choy)
