BULLION MORNING - Gold steady on data-heavy day

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

London 01/10/2012 - Gold was little changed on Monday morning, with a wealth of data and more to come giving markets plenty of food for thought.

Spot gold was last at $1,771-1,771.51 per ounce, down 90 cents from Friday’s close.

“We seem to have established a base now down at $1,740 but we also seem to have a ceiling in place between $1,785 and $1,790,” Marex Spectron’s David Govett said. “It will take some help from other markets to break us one way or the other, as gold does not yet seem to have the appetite to do this by itself.”

In wider markets, the euro was last at 1.2890 against the US dollar after sinking to 1.2800 earlier - its lowest in around three weeks - while market observers grapple with the implications of Spain’s budget plan. Rising debt levels may force Madrid to seek a formal bailout

European manufacturing PMIs showed contraction across the continent last month although it has eased - Spain’s reading of 44.5 was up from 44.0 last time, Italy was up 2.1 at 45.7 and the UK was down 1.1 at 48.4, with the Europe-wide figure at 46.1, up 0.1.

Europe's unemployment rate for August came in unchanged at 11.4 percent, with that of Italy at 10.7 percent.

Although Chinese markets are closed this week for a national holiday, it released its September manufacturing PMI earlier. At 49.2, this was up from 49.8 last time but was its second consecutive reading below the 50 mark that indicates a contraction.

Later today, two manufacturing PMI readings and data on construction spending is due from the US. On Thursday, Europe will again be in the spotlight when the governing council of the European Central Bank meets. It is expected to keep rates stable.

There are also meetings of the Reserve Bank of Australia, the Bank of England and the Bank of Japan, followed on Friday by the release of the closely watched US non-farm payroll numbers.

In India, the Hindu period of remembrance, known as Shraadh, has started. This is an inauspicious period for buying gold, draining liquidity from the domestic market after last week’s uptick for the festival of Lord Ganesha.

But the US physical market looks more robust - the US Mint sold 68,500 ounces of gold and million ounces of silver in September, up 13 percent and 75 percent on September respectively.

Other precious metals were similarly steady - silver at $34.48-34.53 per ounce was in line with Friday’s close of $34.48, platinum at $1,653.75-1,663.75 was down $1.05 and palladium at $635-638.50 was up $1.20.

(Additional reporting by James Moore and Eddie van der Walt, editing by Mark Shaw)

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