* Recovering risk appetite weighs on gold
* Positive manufacturing data outweighs Egypt fears
* Largest gold, silver ETFs see historic outflows in Jan.
* Coming up: U.S. ADP private-sector employment data Wed.
(Recasts, adds comments, updates prices to market close, new
byline, dateline, previously LONDON)
By Frank Tang
NEW YORK, Feb 1 (Reuters) - Gold rose slightly on Tuesday
as a weaker dollar stirred buying interest, but it failed to
rally further after well-received U.S. manufacturing data and
relative peace in Egypt dampened the metal's safe-haven
appeal.
Bullion was initially under pressure after a report showed
that the U.S. manufacturing sector grew at its fastest pace in
nearly seven years in January and inflation data jumped more
than expected as the world's biggest economy gained traction.
[]
Signs of an improving economy boosted riskier investments
such as equities at the expense of gold. U.S. stocks rose 1.5
percent as the market's focus shifted to signs of economic
strength and away from geopolitical concerns. []
"There are a number of conflicting influences battling back
and forth today. Gold is caught among them and failed to
provide any kind of short-term leadership," said Frank McGhee,
head precious metals trader of Integrated Brokerage Services.
McGhee said the fact that the Egyptian army refused to take
action against the protesters prompted investors to assume
there will be a peaceful transition of power, and that helped
limit gold's upside potential.
Spot gold <XAU=> rose 0.4 percent to $1,337.21 an ounce by
2:24 p.m. EST (1925 GMT).
The precious metal rose as high as $1,343.25 an ounce.
"In general the market wouldn't like to be short because it
is afraid of the geopolitical risks we are seeing at the
moment," said Deutsche Bank senior trader Michael Blumenroth.
"On the other hand, there are not so many incentives to be
long at the moment because the big hedge funds are putting
money away from the gold market into riskier markets at the
moment," he said.
U.S. gold futures for April delivery <GCJ1> settled up
$5.80 an ounce to $1,340.30. Volume was lower than usual for a
second day in a row, about one quarter less than its 30-day
moving average.
Open interest in the COMEX gold futures continued to
decline sharply. Exchange data showed it fell 3 percent to
about 465,000 lots, the lowest level since March 2010.
Gold in January posted its biggest monthly drop since
December 2009 as investor risk appetite improved, diverting
interest from so-called havens such as gold into
higher-yielding assets.
The largest gold exchange-traded fund, the SPDR Gold Trust
<GLD.P>, saw its second-largest monthly outflow ever in
January. The iShares Silver Trust <SLV.P>, the main silver ETF,
said its holdings fell by the most ever in a single month.
[]
"Right now confidence is coming back into the market and
safe havens are not so much in demand," said Commerzbank
analyst Eugen Weinberg.
The euro hit a 2-1/2 month high above $1.38, boosted by
solid global manufacturing data, though analysts said risk
appetite could fade if worries resurface about Europe's ability
to manage its debt crisis. []
Geopolitical tension provided some support to the metal due
to the sight of a million people, maybe more, who rallied
across Egypt and clamoured for President Hosni Mubarak to give
up power. The prospect of unrest in Egypt spreading across the
Middle East lifted bullion nearly $40 an ounce last Friday.
BAR PREMIUMS RISE IN TOKYO
Asian physical gold demand lent some support to gold
prices, although this is tailing off as China's Lunar New Year
holiday celebrations get under way.
Premiums for gold bars soared to their highest in more than
two years in Tokyo on Tuesday and could rise further as steady
shipments to other bullion trading centres in Asia led to a
tight supply, dealers said on Tuesday. []
Gold imports in India, the world's largest consumer of the
yellow metal, rose 18 percent in January to 40 tonnes
provisionally, higher than a Reuters forecast, the head of the
Bombay Bullion Association told Reuters. []
Among other commodities, oil prices retreated after hefty
gains in the previous session that took Brent crude past the
$100-a-barrel mark. []
Platinum <XPT=> rose 1.6 percent to $1,820.50 an ounce,
while palladium <XPD=> gained 0.8 percent to $818.47. Silver
<XAG=> climbed 1.4 percent to $28.43 an ounce.
Prices at 2:27 p.m. EST (1927 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCG1> 1339.60 5.80 0.4% -5.8%
US silver <SIH1> 28.514 0.345 0.0% -7.8%
#VALUE!
US palladium <PAH1> 823.55 3.45 0.4% 2.5%
Gold <XAU=> 1337.40 5.50 0.4% -5.8%
Silver <XAG=> 28.43 0.39 1.4% -7.9%
Platinum <XPT=> 1820.00 28.50 1.6% 3.0%
Palladium <XPD=> 818.47 6.50 0.8% 2.4%
Gold Fix <XAUFIX=> 1331.50 -6.00 -0.4% -5.6%
Silver Fix <XAGFIX=> 28.32 57.00 2.1% -7.5%
Platinum Fix <XPTFIX=> 1812.00 4.00 0.2% 4.7%
Palladium Fix <XPDFIX=> 822.00 2.00 0.2% 3.9%
(Additional reporting by Jan Harvey in London; editing by Jim
Marshall)
