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PRECIOUS-Gold snaps two-day losing streak as Asian shares slide

Published 05/04/2016, 04:53 pm
Updated 05/04/2016, 05:00 pm
© Reuters.  PRECIOUS-Gold snaps two-day losing streak as Asian shares slide
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* Mixed U.S. data creates uncertainty for gold - trader

* Possible U.S. interest rate hikes in focus

* Physical market remains weak - StanChart (updates prices)

By A. Ananthalakshmi

SINGAPORE, April 5 (Reuters) - Gold jumped 1 percent on Tuesday following a two-day decline, as Asian stocks slid on weak oil prices and mixed views on the outlook for Federal Reserve monetary policy.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS lost over 1 percent, while Tokyo's Nikkei dropped 2.4 percent to an eight-week closing low. MKTS/GLOB

Spot gold XAU= rose to a session-high of $1,227.60 an ounce before paring some gains to trade up 0.9 percent at $1,225.35 by 0644 GMT. It had dropped 1.4 percent in the past two sessions.

"We are getting mixed data out of the U.S. and somewhat-contradictory comments from the Fed. That is creating some uncertainty for gold," said a Singapore-based trader, adding that the metal was seeing some technical support near its 50-day moving average near $1,215 an ounce.

U.S. data on Monday showed that new orders for manufactured goods dropped in February, while business spending on capital goods was much weaker than initially believed. follows a robust U.S. jobs report last week that showed non-farm payrolls rising by a better-than-expected 215,000, stoking speculation that the Fed could raise rates soon.

Gold had posted its biggest quarterly rise in nearly 30 years in the March quarter, rallying 16 percent as expectations faded that the Fed would move to normalize interest rates due to concerns over the global economy.

The U.S. central bank raised rates in December for the first time in nearly a decade.

Fed Chair Janet Yellen said last week that the U.S. central bank would proceed cautiously with rate increases.

But Boston Federal Reserve President Eric Rosengren said on Monday it was "surprising" that futures markets currently imply only one or no interest rate hikes this year, a prediction he said could prove "too pessimistic". metal is highly exposed to rising rates, which lift the opportunity cost of holding non-yielding assets, while boosting the dollar.

Analysts warned that gold prices could be undermined by outflows from bullion funds and soft physical demand.

Assets of SPDR Gold Trust GLD , the top gold-backed exchange-traded fund, fell 0.29 percent to 815.72 tonnes on Monday. Last week, the fund experienced its first net weekly outflow this year, after climbing to its highest in over two years in March. GOL/ETF

Elsewhere, India's gold imports in February fell 34 percent, news agency NewsRise Financial reported on Monday, citing a government official. GOL/AS

"The physical market remains weak, with India trading at a discount and a modest response from China, and in our view, the current floor looks to be soft, implying better entry levels could be in the offing," Standard Chartered (LON:STAN) said in a note.

PRICES AT 0644 GMT

Metal

Last

Change Pct chg

Spot gold

1225.35

10.7

0.88 Spot silver

15.075

0.205

1.38 Spot platinum

947

8

0.85 Spot palladium

550.72

2.22

0.4 Comex gold

1227.2

7.9

0.65 Comex silver

15.08

0.136

0.91

COMEX gold and silver contracts show the most active months

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