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Raid fixed - Gold 1731.60, Silver 35.94 Eases On ECB Loans, Stronger US GDP
Feb 29, 2012 By Matt Day Of DOW JONES NEWSWIRES

--Comex April gold down $5.30, or 0.3%, at $1,783.10 a troy ounce
--Largely as-expected results of ECB loan operation fail to draw buying in gold
--Upwardly revised US GDP could ease demand for gold as a safe haven

NEW YORK (Dow Jones)--Gold futures slipped on Wednesday, as the largely as-expected result of the European Central Bank's latest effort to stave off a credit crunch wasn't enough to draw new buyers to the market.

Gold for April delivery, the most actively traded contract, was recently down $5.30, or 0.3%, at $1,783.10 a troy ounce on the Comex division of the New York Mercantile Exchange.

The ECB on Wednesday released the results of its second round of long-term emergency loans to the region's banks. A total of 800 banks participated, borrowing more than $700 billion in cheap, three-year loans.

Gold prices slumped late last year as concerns mounted about a potential financial crisis in the euro-zone and spurred traders to hold cash instead of precious metals. But the ECB's efforts to keep cash flowing in the euro zone's financial system has eased the pressure on gold, helping prices gain 14% in 2012 through Tuesday's close.

"It is very possible that the relief and comfort provided (by the ECB moves) is priced in to current market levels," said Steve Scacalossi, a director of precious metals with TD Securities, in a note.

Gold's muted reaction after the ECB release mirrored moves in currencies. The euro initially climbed against the U.S. dollar, but later erased those gains to trade near steady.

A stronger dollar can hit dollar-denominated gold by making the futures appear more expensive for buyers using other currencies. Recent weakness in the dollar helped provide fuel for gold's gains. The precious metal ended on Tuesday at its highest settlement price since November.

The increased liquidity in the euro-zone after the ECB's loan operations "are set to be negative for the euro which could cap gold's gains," said Suki Cooper, an analyst with Barclays Capital, in a note.

Gold held in negative territory Wednesday after a report showed the U.S. economy grew at a faster pace than previously thought during the last three months of 2011. Improving economic data can sap demand for gold. Some investors turn to the yellow metal as a safe harbor from market turmoil.

Gross domestic product grew at an annual rate of 3% during the fourth quarter, the Commerce Department said Wednesday, stronger than the department's earlier estimate of 2.8%.

--By Matt Day, Dow Jones Newswires; 212-416-4986; [e-mail]

(END) Dow Jones Newswires

02-29-12 0940ET

http://news.tradingcharts.com/futures/0/9/174380290.html