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PRECIOUS-Gold steadies near 3-month high as economic worries persist

Published 2016-02-02, 10:27 a/m
© Reuters.  PRECIOUS-Gold steadies near 3-month high as economic worries persist
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* Gold has gained 6 pct this year
* Unclear signals on US rate outlook caps upside
* Short covering seen in gold futures market-analysts

(Updates throughout)
By Susan Fenton
LONDON, Feb 2 (Reuters) - Gold steadied after touching
three-month highs on Tuesday, underpinned by global growth
concerns and as another sharp drop in the oil price pushed
investors towards safe-haven assets.
Weak Chinese manufacturing data on Monday underscored the
challenges for the world economy, while volatility in oil and
other assets fuelled interest in gold as a haven from market
turmoil.
Analysts said there had been some short covering in the gold
futures market as traders who at the turn of the year had
expected four U.S. interest rate rises this year were now less
sure the Federal Reserve would tighten monetary policy so much.
Spot gold XAU= touched $1,130.30 an ounce early on
Tuesday, its strongest since Nov. 3, and was little changed at
$1,128.18 at 1513 GMT. U.S. gold for April delivery GCcv1 was
up 0.1 percent at $1,128.8 an ounce.
"In the near term gold is finding some support in the dovish
tone from central banks last week, notably the Fed and the Bank
of Japan," said Jens Pedersen, senior analyst at Danske Bank.
Gold, which as a non-yielding asset tends to rise on
ultra-low rates, benefited from the Bank of Japan's introduction
last week of negative interest rates and the Fed's statement
after its policy meeting that it will closely monitor the global
economy and financial markets before hiking rates further.
However, the fact that the Fed still kept the door open for
a rate increase in March has capped gold's upside.
"If the Fed had somehow closed the door on March due to the
turmoil we could have seen gold shoot higher," Pedersen said.
Gold is a popular asset of choice in times of uncertainty.
It posted its best monthly jump in a year in January as oil and
stock markets slid, and has risen 6 percent so far in 2016,
after falling 10.4 percent last year.
"It is perfectly possible that it will move towards $1,150
(in coming weeks) and then it will depend on the equity
markets," said Carsten Menke, an analyst at Julius Baer.
"Clearly this is an environment that is supportive for gold in
the short term."
Reflecting growing confidence in gold, holdings of SPDR Gold
Trust GLD , the world's largest gold-backed exchange-traded
fund, rose to 21.9 million ounces on Monday, the most since Nov.
3. GOL/ETF
Spot platinum XPT= was down 1.3 percent at $857.99 an
ounce, palladium XPD= was down 1.4 percent at $493.25 and
silver XAG= was up 0.2 percent at $14.34.

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