* Bullion higher on day after U.S. growth data disappoints
* Gold down 5 pct in July, worst monthly loss in 2010
* Palladium holds near highest since late June
* Coming up: U.S. ISM manufacturing index due Monday
(Recasts, updates prices to market close, adds comments,
changes byline, dateline, previous LONDON)
By Frank Tang
NEW YORK, July 30 (Reuters) - Gold rallied Friday on
disappointing U.S. economic growth data, but the metal still
logged its biggest monthly loss since December as safe-haven
demand fizzled on lessening fears over a euro zone sovereign
debt crisis.
Gold lost about 5 percent in July and was among the top
percentage losers in the commodities complex.
Analysts said the metal is at risk of falling sharply after
breaking below a two-year bullish support channel. A sharp drop
of bullion holdings in the world's biggest gold-backed exchange
traded fund was also seen bearish.
(Graphic: http://link.reuters.com/wyw52n)
On Friday, gold benefited after data showed U.S. economic
growth slowed in the second quarter, raising concerns about the
recovery in the rest of 2010. []
The bad GDP report prompted gold investors to cover short
positions, said Frank McGhee, head precious metals trader at
Integrated Brokerage Services.
"The disappointing figure has put some fear back into the
market. If the GDP had come out very strong, gold would have
continued to slide," McGhee said.
Spot gold <XAU=> was at $1,180.25 an ounce at 2:10 p.m. EDT
(1810 GMT), against $1,168.05 late in New York on Thursday.
U.S. gold futures for December delivery <GCZ0> settled up
$12.70, or 1.1 percent, at $1,183.90.
On a daily basis, however, gold's gains on Friday were the
biggest in more than two weeks.
Prices rose as high as $1,185.80 on the December contract
earlier in the session after the disappointing GDP report,
which knocked equity markets lower. However, prices failed to
rise further toward $1,200.
"Compared to the buying we saw in the early summer months
on the gold market, which was driven by sovereign debt, a
downward revision in the second estimate of U.S. GDP growth is
relatively small fish," said Bank of America-Merrill Lynch
analyst Michael Widmer.
U.S. stocks eased on Friday, but for the second day in a
row major indexes bounced off session lows, this time on a
positive report on Midwest manufacturing activity.
[]
Gold investors also took heart when the dollar hit its
lowest since November against the Japanese yen on Friday as
data showed growth in the world's largest economy is slowing
and reinforced expectations for low U.S. interest rates into
2011. []
"The strength of the global recovery is still debatable as
the yen, often viewed as a safe haven, strengthens against the
dollar and the euro," said Saxo Bank senior manager Ole
Hansen.
TECHNICAL WEAKNESS
From a technical perspective, gold is still looking
vulnerable to further losses after breaking through key support
at $1,175 an ounce earlier this week, analysts said.
[]
Among other precious metals, silver <XAG=> was at $18 an
ounce against $17.59, while platinum <XPT=> was at $1,566.50 an
ounce against $1,560.
Palladium <XPD=>, which rose more than 4 percent on
Thursday on options-related buying, hit its highest since June
22 at $497 on Friday, and was later at $494 versus $485.28.
The metal, which is up 10 percent so far in July, posted
its first monthly gain since April. The gold-palladium ratio --
the number of ounces of palladium needed to buy an ounce of
gold -- fell to 2.4 on Friday, its lowest since mid-May.
"We can understand why palladium and the commodity complex
have outperformed gold of late," said UBS analyst Edel Tully in
a note. "Quite simply, investors are seeking risk and for now
gold's safe haven properties have been made redundant."
Prices at 2:18 p.m. EDT (1818 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCZ0> 1183.90 12.70 1.1% 8.0%
US silver <SIU0> 18.003 0.386 0.0% 6.9%
US platinum <PLV0> 1576.80 13.40 0.9% 7.2%
US palladium <PAU0> 500.00 8.80 1.8% 22.3%
Gold <XAU=> 1181.45 13.40 1.1% 7.8%
Silver <XAG=> 17.99 0.40 2.4% 6.9%
Platinum <XPT=> 1567.50 7.50 0.5% 7.0%
Palladium <XPD=> 494.00 8.72 1.8% 21.8%
Gold Fix <XAUFIX=> 1169.00 1.00 0.1% 5.9%
Silver Fix <XAGFIX=> 17.66 6.00 0.3% 3.9%
Platinum Fix <XPTFIX=> 1555.00 0.00 0.0% 6.1%
Palladium Fix <XPDFIX=> 487.00 4.00 0.8% 21.1%
(Additional reporting by Jan Harvey in London; Editing by Lisa
Shumaker)
(Reporting by Frank Tang)
