* Physical gold demand blooms post price-dip
* Technical picture brightens after prices bottomed
* China vows to develop gold market
* Coming up: US July nonfarm payrolls due Friday
(Recasts, updates prices to market close, changes byline,
dateline, previous LONDON)
By Frank Tang
NEW YORK, Aug 3 (Reuters) - Gold rose slightly on Tuesday
as investors steered clear of U.S. stocks after weak economic
data, China moved to make trading gold easier and physical
demand improved after bullion's recent slide.
The technical picture also improved. Investors are
regaining confidence in the yellow metal after prices bounced
from a key long-term support area last week.
Bullion extended gains after U.S. data showed consumer
spending and incomes were flat in June while the index for
pending sales of previously owned homes fell to a record low.
[]
The metal lost 5 percent in July. Its usual negative
correlations with the dollar seemed to reverse as the U.S.
economic outlook turned more positive last month.
(Graphic: http://link.reuters.com/ryh23n )
(Graphic: http://link.reuters.com/syh23n )
Scott Meyers, senior analyst at New York-based Pioneer
Futures Inc, said that gold's direction hinged on the stock
market's performance, as a possible equities sell-off could
spark higher gold prices.
He said an improved technical picture should also lift
prices, after the metal tried and fail last week to break below
a rising trendline in place for two years.
(Graphic: http://link.reuters.com/haj23n )
"There was a three-day bottom formed at $1,160 last week,
and the market held there well. From a short-term technical
perspective, it is indicative of a market that does perform
well and will possibly advance to another level" above $1,200
an ounce, Meyers said.
Spot gold <XAU=> was $1,186.45 an ounce at 2:32 p.m. EDT
(1832 GMT), against $1,181.25 late in New York on Monday. U.S.
gold futures for December delivery <GCZ0> settled up $2.10 at
$1,187.50 an ounce.
Spot gold lost upward momentum after hitting a record
$1,264.90 an ounce in June as concerns over euro zone sovereign
debt levels abated.
Gold exchange-traded funds saw net outflows last month, and
net long positions in COMEX gold futures fell.
(Graphic: http://link.reuters.com/mej23n )
"With the rejuvenating confidence in the health of the
global economy, gold's role as an investment asset seems to be
fading," said Richcomm Global Services analyst Pradeep Unni.
But broader physical demand for gold has risen,
particularly in Asia, as prices fell. Traders in India, the
world's biggest gold consumer, are buying ahead of festivals.
The stronger rupee was another incentive for for local buyers.
[]
CHINA TO DEVELOP GOLD MARKET
Signs that China will allow private demand for the yellow
metal to grow also improved buying sentiment.
China's central bank said in a statement it will allow its
banks to import and export more gold as part of a program to
push forward the development of the country's market in the
precious metal. []
"This is largely positive news for gold," said UBS analyst
Edel Tully. "It looks like an effort to further liberalize the
gold market and integrate it into China's financial
framework."
She added that the move highlighted the importance of the
Chinese gold market both for the broader Chinese economy and
for the global gold trade. China is the world's top producer
and No. 2 consumer of gold behind India, but its trade is
largely domestic.
Among other precious metals, silver <XAG=> was at $18.44
against $18.34, platinum <XPT=> at $1,578 an ounce versus
$1,586.75 and palladium <XPD=> at $499 versus $509.70.
Prices at 2:45 p.m. EDT (1845 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCZ0> 1187.50 2.10 0.2% 8.3%
US silver <SIU0> 18.422 0.003 0.0% 9.4%
US platinum <PLV0> 1587.10 -15.10 -0.9% 7.9%
US palladium <PAU0> 506.45 -9.40 -1.8% 23.9%
Gold <XAU=> 1186.45 5.20 0.4% 8.2%
Silver <XAG=> 18.44 0.10 0.5% 9.5%
Platinum <XPT=> 1578.00 -15.25 -1.0% 7.7%
Palladium <XPD=> 499.00 -10.70 -2.1% 23.1%
Gold Fix <XAUFIX=> 1187.50 3.50 0.3% 7.6%
Silver Fix <XAGFIX=> 18.42 31.00 1.7% 8.4%
Platinum Fix <XPTFIX=> 1590.00 0.00 0.0% 8.5%
Palladium Fix <XPDFIX=> 514.00 5.00 1.0% 27.9%
(Additional reporting by Jan Harvey in London; Editing by
Alden Bentley)
