PRECIOUS-Gold rises on dollar drop, economic data in focus

July 25, 2013

* Gold ends near resistance at 50-day moving average * Silver ETF holdings rise as price recovers * Coming up: Reuters/U.Michgan sentiment Friday (Adds analyst comment, updates prices, adds second byline, dateline) By Frank Tang and Jan Harvey NEW YORK/LONDON, July 25 (Reuters) - Gold rose half a percent on Thursday as a drop in the dollar prompted investors to buy, sending bullion back to the key technical resistance level near $1,330 an ounce. The metal benefits as the dollar fell against the euro after a German Ifo survey showing business morale improved there. Data also showed new U.S. claims for jobless benefits edged higher last week, but remained within a range that suggests the labour market's recovery is on track. However, an improving U.S. economic outlook could weigh on gold prices, analysts said. On Wednesday, data showed new U.S. home sales in June vaulted to a five-year high, while the U.S. manufacturing sector and euro zone private industry also improved in July. "We still think there is potential for lower prices in gold because of seasonal weakness and signs of weaker jewellery demand from China," said Erica Rannestad, analyst at commodities research and consultant CPM Group. Spot gold fell as low as $1,308.74 an ounce in early trading but sharply recovered to $1,327.51 an ounce by 2:17 p.m. EDT (1817 GMT), up 0.5 percent. The gain put spot bullion at its 50-day moving average of $1,327 an ounce, Reuters data showed. U.S. gold futures for August delivery settled up $9.30 at $1,328.80 an ounce, with trading volume about 5 percent above its 30-day average, preliminary data showed. Thursday's COMEX August option expiration helped boost turnover, and buying related to short-covering also supported gold futures, traders said. The markets are awaiting fresh clues from the Federal Reserve on the outlook for its bond-buying stimulus program, which has helped fuel gold's rally to record highs in recent years. The U.S. central bank meets next Tuesday and Wednesday, with a policy statement due at the end of the two-day meeting. SILVER ETF HOLDINGS SURGE The world's largest silver-backed exchange-traded fund iShares Silver Trust posted its biggest one-day jump in holdings since January as a rebound in silver prices triggered resurgent buying from longer-term retail investors, analysts said on Thursday. The move stands in sharp contrast to a month ago when the silver ETF's tonnage tumbled to a 2013 low, sparking fears that mom-and-pop investors were beginning to lose faith in the metal. After falling toward technical support at $18 twice and holding there each time, silver's price has gained 11 percent in the past 30 days. Year to date, silver is still down 33 percent, underperforming gold which is down 21 percent. Silver was up 0.2 percent at $20.18 an ounce. Among platinum group metals, platinum was down 18 cents at $1,442.74 an ounce and palladium dropped 1 percent to $737 an ounce. 2:17 PM EDT LAST/ NET PCT LOW HIGH CURRENT SETTLE CHNG CHNG VOL US Gold AUG 1328.80 9.30 0.7 1308.40 1331.90 152,411 US Silver SEP 20.154 0.134 0.7 19.750 20.230 28,781 US Plat OCT 1447.90 -7.30 -0.5 1428.80 1453.20 7,833 US Pall SEP 740.75 -4.55 -0.6 734.20 749.25 3,505 Gold 1327.51 6.82 0.5 1308.74 1330.95 Silver 20.180 0.040 0.2 19.820 20.240 Platinum 1442.74 -0.18 0.0 1430.00 1451.50 Palladium 737.00 -7.15 -1.0 737.25 747.00 TOTAL MARKET VOLUME 30-D ATM VOLATILITY CURRENT 30D AVG 250D AVG CURRENT CHG US Gold 213,743 202,321 179,779 21.83 -2.36 US Silver 30,448 61,797 56,465 29.9 0.42 US Platinum 7,935 14,779 13,078 23.86 -0.07 US Palladium 3,593 4,355 5,472 (Additional reporting by A. Ananthalakshmi and Veronica Brown; Editing by Anthony Barker and Bob Burgdorfer)