Wed May 30, 2012 4:57pm EDT
* Safe-haven buying seen as equities, commods tumble
* Rebounds off technical support around $1,530
* Gold set for fourth monthly drop, outlook still shaky
* Coming up: U.S. ADP private-sector jobs report
(Rewrites, updates comment, market activity)
By Frank Tang
NEW YORK, May 30 (Reuters) - Gold staged a dramatic
mid-session turn-around in heavy trade on Wednesday, rebounding
more than $30 an ounce as a deepening sell-off in riskier assets
rekindled safe-haven demand and technical bids kicked in at a
key support level.
The abrupt reversal at mid-morning prevented gold from
dropping below $1,530 an ounce, near this year's lows. Traders
said the deepening euro zone crisis may encourage anxious
investors to turn to gold to protect their portfolios against
Gold rose by 0.6 percent by day's end, breaking from its
recent trend of trading in sync with equities and other
commodity markets. Oil fell by more than 3 percent and U.S.
stocks dropped by around 1.5 percent, while the dollar and U.S.
Treasuries rallied on jitters over the crisis in Europe.
"This morning's reversal (shows) that people are starting to
come to grips with the fact that there isn't any fast and easy
solution in Europe," said James Dailey, portfolio manager of
TEAM Financial Asset Management.
"And if things start to really get out of hand in Spain and
Italy, that means gold can catch a bid."
The European Commission offered Spain more time to reduce
its budget deficit and direct aid from a euro zone rescue fund
to capitalize distressed banks. Greece's election next month
could also send the region's crisis spiral out of control.
Bullion investor sentiment remained fickle as the price of
gold has lost $100 in the last four weeks, and is about even
since the start of the year. It was down 6 percent in May, its
biggest monthly decline since December.
Spot gold was up 0.6 percent at $1,563.60 an ounce by
4:16 p.m. EDT (2016 GMT), having hit a two-week low of
U.S. COMEX gold futures for June delivery settled up
$14.70 an ounce at $1,563.40.
U.S. futures trading activity was unusually frenetic for a
second day, logging around 350,000 lots versus the 30-day
average at about 180,000 lots, preliminary Reuters data showed.
Tuesday's COMEX trading volume -- which included light trade on
Monday, a U.S. public holiday-- hit an all-time high at 484,721
lots, surpassing the previous record from Aug. 24, 2011.
TECHNICALS, US PAYROLLS EYED
Technical buying helped lift the metal after bullion fell
close to resistance around $1,530 an ounce and rebounded for the
third time in two weeks.
Sarhan Capital CEO Adam Sarhan said if gold holds support
between $1,520-30, it should keep moving sideways, trading below
major moving averages and its long-term uptrend.
Attention is already shifting towards U.S. employment data
on Friday, which is expected show the world's largest economy
added 150,000 new jobs in May. Any disappointment would likely
mean more market volatility.
Earlier this year, gold had gained 15 percent after the U.S.
Federal Reserve said it would keep interest rates near zero
until at least late 2014.
Since then, however, investors have shunned gold due to a
lack of economic stimulus from central banks. On Tuesday, the
safe-haven metal actually fell more than other commodities on
jitters surrounding the European sovereign debt crisis.
Among other precious metals, silver rose 0.4 percent
to $27.93 an ounce. Platinum was down 2 percent at $1,395.99 an
ounce, while palladium edged up 0.4 percent at $603.72 an
ounce, as both platinum group metals followed industrial metals
which fell sharply on economic concerns.