BULLION MORNING - Gold lower ahead of Jackson Hole, ETFs now fourth-largest gold holders

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Eddie van der Walteddie.vanderwalt@fastmarkets.comBullion Editor+44 (0)20 7264 2489

London 29/08/2012 - Precious metals were broadly lower ahead of the closely watched Jackson Hole symposium from Thursday this week and the release of US GDP data later on Wednesday.

Many investors are looking to this symposium - which runs to Saturday - for an announcement on further quantitative easing by US Federal Reserve chairman Ben Bernanke. He used this occasion to do so in 2010.

Gold was last quoted at $1,665.59/1,665.99 per ounce, down $1.52 on the close, having traded as high as $1,670.07 earlier

"Gold's strong rebound after its break from the base triangle looks robust but, unsurprisingly, prices are now encountering some resistance from the series of mini-peaks from March and April that start at $1,671 and run up to $1,715," FastMarkets analyst William Adams said.

"The increase in the price of gold in recent days has attracted further investors to the gold market," Commerzbank said. "The gold ETFs tracked by Bloomberg, for example, again recorded inflows in excess of five tonnes yesterday, and have expanded their holdings to a new all-time high of nearly 2,457 tonnes.”

Taken together, total ETF holdings are now larger than Italy’ reserves of the metal, having already surpassed that of France earlier in the week.

"Put together, gold ETFs thus account for the world’s fourth-largest gold reserves behind the US, Germany and the IMF," Commerzbank said.

Several central banks have also added to their reserves, according the International Monetary Fund. Russia added 18.6 tonnes, Kazakhstan 1.4 tonnes and Ukraine 0.2 tonnes in July, its figures show.

The largest increase, however, was in Turkey, where 44.7 tonnes were added, though this was a result of regulatory requirements - the Turkish central bank now accepts a higher proportion of gold in its reserve requirements from commercial banks, thus inflating its holdings.

"Central banks are likely to remain a key source of support for the gold price as the year continues," Commerzbank said.

Marginal strength in the Indian rupee brought the local gold price down from its all-time high on Monday. The metal was last at 92,712 rupees per ounce, having soared as high as 92,995 rupees on Monday.

The rupee was last quoted at 55.67 against the dollar, up 0.015. India is vying with China for the position as the world's largest consumer of the yellow metal.

Data releases scheduled for today include the US preliminary second-quarter GDP growth figure, which is expected to come in at 1.7 percent, and pending home sales, which are forecast to 1.1 percent. The beige book, an analysis which is used by the FOMC to help it make decisions on interest rates, is due out at 19:00 BST.

Market participants are also hoping for further monetary easing signals from China, with the focus on the key manufacturing purchasing managers index due in the early hours of Saturday. It is expected to come in at 49.8; - any number below 50 indicates contraction.

In currencies, the euro was still near its eight-week high set last week, trading at 1.2565 against the dollar, virtually unchanged on the close, while the US dollar index was unchanged at 81.37.

Oil appears to have staved off concerns over Hurricane Isaac and was last quoted at $111.68/111.73 per barrel, down 66 cents.


PLATINUM REGAINS SOME STRENGTH AS LONMIN STRIKE WORSENS

Platinum was the only precious metal to trade higher, edging $1.25 higher to $1,515.75/1,525.75 per ounce.

Continuing wildcat strikes in major producer South Africa has lifted the metal out of its long-held range around $1,400.

Worker attendance at Lonmin's Marikana mine, where clashes between strikers and police resulted in the death of 44 people, had dropped to just eight percent, according to unconfirmed reports from South Africa - it had been as high as 33 percent a week ago.

Some of those employees taking part in the illegal strike are reportedly intimidating fellow workers, preventing them from clocking in, those reports also claimed.

So far the strike is thought to have cost Lonmin 45,000 ounces of platinum output.

There is some evidence that the strikes may also be spreading to other mining industries in the country, including gold. South Africa is the world's fifth-largest producer of gold.

In other precious metals, silver remains near its 17-week high set on Monday. It was last at $30.82/30.87 per ounce, down six cents on the close. Palladium, meanwhile, dipped $7.85 to $630.75/636.75 per ounce.


(Editing by Mark Shaw)



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