* Gold steadies but seen vulnerable on technical charts
* Physical buying picks up in India after price drop
* Coming up: U.S. GDP Q2 advanced reading on Friday
(Recasts, updates prices to market close, adds second
byline, dateline)
By Frank Tang and Amanda Cooper
NEW YORK/LONDON, July 28 (Reuters) - Gold was largely flat
on Wednesday as the market took a breather after hitting
three-month lows the day before.
Strong physical bullion demand from top consumer India
provided support alongside economic jitters.
The metal remained slightly lower as there were few
surprises after the Federal Reserve said the U.S. economy kept
growing overall in recent weeks, but unevenly and it actually
slowed in a few regions as housing markets softened after the
end of a popular tax break. []
Gold, however, looked susceptible to further decline on
technical charts after a 2-percent drop on Tuesday, and now
bullion prices are still at risk of breaking below a two-year
bullish support channel and could fall toward $1,000 an ounce,
analysts said. []
"For now, the metal looks very bearish technically and to
be honest, all these moves since yesterday are heavily
technically driven," said Standard Bank analyst Walter de Wet.
"I think it is going to fall more, but longer term, we
still see the bull market intact. Underlying, the same issues
that have pushed gold higher still remain," he added.
Spot gold <XAU=> was at $1,163.75 an ounce at 3:53 p.m.
EDT (1953 GMT), against $1,159.65 late in New York on Tuesday.
U.S. gold futures for August delivery <GCQ0> settled up $2.40
an ounce at $1,160.40.
Prices hit a near three-month low on Tuesday as selling of
commodities after weak U.S. consumer confidence data pushed the
metal through key technical support levels.
Price volatility of gold futures could still spike ahead of
August's first-notice day on Friday, as gold investors rolled
their August futures into December contracts, traders said.
As much of the fear surrounding the euro zone debt crisis
recedes and recent upbeat earnings allay some concern about the
outlook for the global economy, gold is likely to encounter
more weakness, especially after breaking key technical
barriers.
After the release of the European bank stress tests, a lot
of investor unease over the resilience of the European banking
system has subsided but patchy U.S. data has fed concern that
growth in the world's largest economy could falter.
U.S. stocks eased after an unexpected fall in durable goods
orders in June and Boeing Co <BA.N> delivered a profit outlook
that fell below Wall Street's consensus forecast. []
Commerzbank analyst Daniel Briesemann said despite the
metal's slight recovery earlier, diversification into other
assets, seasonal demand weakness and a tendency towards
liquidation of long positions are all still pressuring prices.
"There has been a massive increase in risk appetite among
market participants Briesemann said.
"We see money shifting away from safe haven assets like
gold to riskier assets like equities and oil."
Risk appetite was helped by strong corporate earnings and
the fact that new Basel III capital rules proved less stringent
than expected.
TECHNICALLY BEARISH
From a technical perspective, gold prices are looking
vulnerable after breaking through support in the $1,175-1,180
an ounce area, analysts said.
"Taking a closer look at the price action from the June 21
highs (near) $1,265, the decline can best be described as
corrective... with downside targets seen to the 200 day
average, now $1,147," said Barclays Capital in a note.
It said a decline to near $1,114 was likely to be the worst
case scenario. "we look for renewed signs of basing before a
return to trend," it added.
While the risk of further losses remains, analysts said
gold should be supported by re-emergent physical demand at
lower prices. Traders in India, the world's biggest gold
consumer, said buying was picking up as the metal became more
affordable. []
Among other precious metals, spot silver <XAG=> was at
$17.49 an ounce against $17.61, spot platinum <XPT=> was at
$1,535.50 an ounce against $1,527.15, and spot palladium <XPD=>
was at $466.00 versus $464.85.
Prices at 4:04 p.m. EDT (2004 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCQ0> 1160.40 2.40 0.2% 5.9%
US silver <SIU0> 17.441 -0.185 0.0% 3.5%
US platinum <PLV0> 1541.70 5.00 0.3% 4.8%
US palladium <PAU0> 468.75 2.20 0.5% 14.7%
Gold <XAU=> 1162.85 3.20 0.3% 6.1%
Silver <XAG=> 17.50 -0.11 -0.6% 3.9%
Platinum <XPT=> 1536.00 8.85 0.6% 4.8%
Palladium <XPD=> 466.00 1.15 0.2% 14.9%
Gold Fix <XAUFIX=> 1157.00 -7.00 -0.6% 4.8%
Silver Fix <XAGFIX=> 17.63 -53.00 -2.9% 3.8%
Platinum Fix <XPTFIX=> 1535.00 5.00 0.3% 4.7%
Palladium Fix <XPDFIX=> 469.00 1.00 0.2% 16.7%
(Additional reporting by Jan Harvey in London; Editing by
Sofina Mirza-Reid)
