BULLION MORNING - Steady tone in gold continues, easing measures still support

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Angela Shardaangela.sharda@fastmarkets.com+44 (0)20 7264 2489

London 26/09/2012 - Gold was steady on Tuesday morning, down marginally from recent multi-month highs but supported by recent easing measures that highlighted its inflation-hedging qualities.

Spot gold was last at $1,762.80-1,763.30 per ounce, up $1.16 from Friday’s close. Earlier, the metal hit an intraday high of $1,765.65.

“The sideways trend continues for the time being, so watch stocks, dollars and oil for short-term direction,” David Govett, head of precious metals at Marex Spectron, said. “Dips should still be bought, with support still at $1,750 and resistance up at the recent highs.”

Central banks around the world - including the People’s Bank of China, the European Central Bank, the US Federal Reserve and, most recently, the Bank of Japan - have loosened monetary policy, propelling gold to its highest in more than six months last week around $1,790.

With gold prices running higher and low interest rates reducing the attractiveness of fiat currencies, investors have piled into exchange-traded futures - net holdings in the gold ETFs followed by FastMarkets hit an all-time high overnight of 2,565.05 tonnes.

Holdings in the largest fund, SPDR Gold, rose a further 4.5 tonnes to a record 1,331.33 tonnes and are up 41.8 tonnes in the month to date.

Europe is in focus today. A de facto Catalan referendum on independence from Spain and an anticipated challenge to the European Central Bank's (ECB) bond buying plans from the German Bundesbank caused concern.

In Spain, thousands of protesters also protested outside parliament on Tuesday ahead of an announcement on new austerity measures later this week.

Italian retail sales growth data came in slightly below expectations at -0.2 percent - it was seeing to -0.1 percent.

“Gold is still not being viewed as a safe haven and as such any trouble in Europe should be negative for prices,” Govett said.

In wider markets, the euro was last at a soft 1.2875 against the US dollar, having dipped as low as 1.2845 earlier.

In mining news, AngloGold Ashanti, the world's third-largest bullion producer, said it has halted its South Africa operations as mining strikes in the country spread.

Workers at the AngloGold's West Wits and the balance of the Vaal River Regions' operations downed tools yesterday, joining those at Kopanang who have been on strike since September 20, the company said.

In other precious metals, silver was last trading at $33.88-33.93 per ounce, up six cents from Tuesday’s close. Platinum was up $1.20 from Wednesday’s close, last at $1,625.25-1,635.25. While, sister metal palladium last traded at $632.50-638.50, up $1.10 from yesterday’s close.

(Editing by Mark Shaw)

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