US MIDDAY: gold rises

Gold rose 0.5 percent early on Thursday after two days of losses, lifted by a drop in the dollar and a rally by crude oil on increasing geopolitical tensions in the Middle East. Data showing a surge in US new claims for jobless aid and weaker factory activity in the US Mid-Atlantic region improved the outlook for additional economic stimulus from the Federal Reserve and boosted bullion's investment appeal.
Bullion, a traditional inflation hedge, has retreated from levels seen earlier this year due to a lack of more-concrete measures by the US central bank to stimulate a slowing economy. This week, Fed Chairman Ben Bernanke again gave no hint of any new round of asset buybacks, or quantitative easing (QE). "The underlying fundamental story why gold was moving sideways in the past three months is that investors are just not clear whether or not we are going to see another round of quantitative easing from the Fed," said Adam Sarhan, CEO of New York-based Sarhan Capital.
Spot gold was up 0.5 percent for the day at $1,580.86 an ounce by 1:36 p.m. EDT (1736 GMT). Gold's rally on Thursday also brightened its technical outlook as prices have now risen above their 20- and 50-day moving averages (DMA).
US gold futures for August delivery were up $9.90 at $1,580.70 an ounce, with trading volume in line with its normal pace, preliminary Reuters data showed. Gold drew support from a 3 percent surge in oil as the killing of Syrian security chiefs on Wednesday, and an attack on Israeli tourists in Bulgaria, which Israel accused Iran of carrying out, worsened the crisis in the Middle East.
Fears of deflation and a global economic slowdown have weighed heavily on gold, which is also used by some institutional investors as a hedge against US dollar depreciation. A Reuters poll of hundreds of economists world-wide showed the global economy will labour against a dismal tide from recession-hit Europe for the rest of this year, but 2013 should bring better growth.
The global economy will grow around 3.2 percent in 2012 and 3.7 percent next year, the poll showed, a slight downgrade from April's poll and slower than the International Monetary Fund's reading of 3.9 percent for 2011. Silver gained 0.4 percent to $27.24 an ounce. Spot platinum was up 0.9 percent at $1,412.25 an ounce, while spot palladium rose 1.6 percent at $580.25 an ounce.