* Gold slips on technical selling as initial rally fizzles
* SPDR gold ETF sees biggest outflow in a year in July
* Palladium breaks $500/oz to highest since May 17
* Coming up: U.S. pending home sales due Tuesday
(Recasts, adds comments, updates prices to market close)
By Frank Tang
NEW YORK, Aug 2 (Reuters) - Gold was largely flat on Monday
after an initial rally fizzled, as solid gains in equity
markets driven by strong economic sentiment took a toll on the
metal's safe-haven appeal.
Silver and platinum group metals rose sharply on better
industrial demand expectations as strong corporate earnings
from European banks fueled Dow's more than 200-point gain.
In early sessions, gold rose toward $1,200 an ounce,
tracking the stronger performance of crude oil and other
commodities. However, the metal later turned flat with a lack
of follow-through support.
Selling by short-term traders more than offset underlying
physical demand in earlier trade, said Michael Daly, gold
specialist at Chicago-based futures broker PFGBest. There was
also lack of trading interest ahead of Friday's July nonfarm
payroll data, he said.
"Any type of nervousness and any type of feeling of lost
momentum is prompting investors to take profits," Daly said.
In recent weeks, gold prices were pressured as a flight to
quality faded on signs that an European sovereign debt crisis
would not spread. Gold lost about 5 percent in July and was
among the top percentage losers in commodities.
Spot gold <XAU=> rose as high as $1,190.40 an ounce and was
last at $1,182.25 an ounce at 3:27 p.m. EDT (1927 GMT), against
$1,181.50 late in New York on Friday. U.S. gold futures for
December delivery <GCZ0> settled up $1.50 at $1,185.40.
Gold failed to extend initial gains as U.S. stocks neared
their best close in 10 weeks on Monday, and as crude oil rose
above $80 a barrel on a weaker U.S. dollar and positive
economic sentiment. [] []
Gold has traced out a new downward trendline on charts, and
a new technical buy signal will be triggered if gold breaks out
above that important level, said Adam Sarhan, chief executive
of New York-based Sarhan Capital.
(Graphic: http://link.reuters.com/qep82n)
Last week, gold closed just above a two-year bullish
trendline after analysts said the metal was at risk of falling
breaking below that critical chart support.
Gold in early sessions had risen above the 100-day moving
average at $1,183 an ounce on the back of currency moves and
rising oil prices.
However, gold remained vulnerable to losses, especially if
equity markets continued to climb, said Simon Weeks, head of
precious metals at the Bank of Nova Scotia.
"People will liquidate safe havens and put risk on," he
said.
Gold managed to arrest a slide that last week took it to a
three-month low of $1,156.90 an ounce and then turn higher in
its best run since late May.
Investment in gold has ebbed recently, however, as assets
seen as higher risk such as stocks have firmed.
The world's largest bullion exchange-traded fund, the SPDR
Gold Trust <GLD>, reported its biggest outflow in a year last
month, with holdings down more than 38 tonnes in July to
1,282.3 tonnes. []
DOLLAR WEAK, EURO NEARS $1.32
Despite the Wall Street rally, fears the U.S. recovery is
faltering drove the dollar to a three-month low against a
basket of currencies, while the euro <EUR=> neared $1.32 for
the first time since early May. []
Lower prices, meanwhile, encouraged higher gold demand from
key bullion-consuming centers China, India and the Middle East.
[] [] []
The World Gold Council said the International Monetary Fund
sold 17.4 tonnes of gold in June as part of a planned program
of bullion sales. That leaves 120.2 tonnes of gold still to be
sold under the program. []
Silver <XAG=> was up by over 2 percent at $18.36 an ounce
versus $17.96, making this its strongest one-day performance
since early June, while its ratio to gold -- or how many ounces
of silver are needed to buy an ounce of gold -- hit its lowest
since mid-May at 65.0.
Platinum <XPT=> was at $1,595.50 an ounce against
$1,566.55, while palladium <XPD=> was at $509.50 against $491,
having hit its highest since mid-May earlier in the day.
Prices at 3:43 p.m. EDT (1943 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCZ0> 1185.40 1.50 0.1% 8.1%
US silver <SIU0> 18.419 0.416 0.0% 9.3%
US platinum <PLV0> 1602.20 25.40 1.6% 8.9%
US palladium <PAU0> 515.85 15.85 3.2% 26.2%
Gold <XAU=> 1181.60 0.10 0.0% 7.8%
Silver <XAG=> 18.36 0.40 2.2% 9.0%
Platinum <XPT=> 1595.50 28.95 1.8% 8.9%
Palladium <XPD=> 509.50 18.50 3.8% 25.6%
Gold Fix <XAUFIX=> 1188.50 10.50 0.9% 7.7%
Silver Fix <XAGFIX=> 18.11 45.00 2.5% 6.6%
Platinum Fix <XPTFIX=> 1587.00 1.00 0.1% 8.3%
Palladium Fix <XPDFIX=> 501.00 3.00 0.6% 24.6%
(Additional reporting by Jan Harvey in London; Editing by Lisa
Shumaker)
