* Gold bounces from near two-month low on Monday
* Weak housing data, uncertainty fuels technical buying
* Dennis Gartman says halves his gold position
* Coming up: Ben Bernanke's Congress testimony Wednesday
(Recasts, adds comment, updates prices to market close,
changes byline, dateline, previous LONDON)
By Frank Tang
NEW YORK, July 20 (Reuters) - Gold rose 1 percent on
Tuesday on technical buying as prices rebounded from near
two-month lows in the previous session, and as weak U.S.
housing data stirred economic uncertainty.
Bullion has not staged a sustained rally in the past five
sessions, and prices on Monday fell toward an important bullish
support level, which was seen as a natural market entry point,
technical analysts said. []
Gold benefited from economic worries after another
lackluster U.S. housing indicator offered further evidence that
the economy lost momentum in the second quarter. Traders also
cited jitters related to Friday's outcome of stress tests on
European banks.
"There is a lot of uncertainty in the market, as gold
bounced off and held above key support levels at $1,175-1,180
in the last two sessions, and we are seeing real strong buying
below that level," said Sean Lusk, market specialist at
Chicago-based futures broker PFGBest.
Lusk also cited short-covering for gold's gains.
Spot gold <XAU=> was at $1,192 an ounce at 2:36 p.m. EDT
(1836 GMT), against $1,180.35 late in New York on Monday,
having earlier slipped as low as $1,175.35, the weakest price
since May 24.
U.S. gold futures for August delivery <GCQ0> settled up
$9.80 an ounce at $1,191.70.
Gold prices gradually moved higher after data showed U.S.
housing starts hit their lowest level in eight months in June.
This came after a Monday report indicated homebuilders'
confidence tumbled to a 15-month low.
[][]
"Where there is uncertainty in the market, gold and
precious metals seem to benefit the most," said Jeff Pritchard,
a broker at California-based Altavest Worldwide Trading.
"(If) we see really good results from the (Euro bank)
stress tests, gold will take the biggest hit, but if there is
more uncertainty and it creates more foreseeable problems, we
could see an extension to this rally in gold," he said.
GOLD MOVES IN TANDEM WITH DOLLAR
Gold rose as the euro retreated from a 10-week high against
the dollar as weak U.S. earnings dulled risk appetite and
investors took profits on euro gains ahead of European bank
stress test results due Friday. []
On Tuesday, the dollar firmed against a basket of
currencies. Historically, a stronger dollar has been negative
for gold, as it curbs gold's appeal as an alternative asset and
makes dollar-priced commodities pricier for other currency
holders.
That inverse relationship has reversed since the start of
the year as both benefited from risk aversion.
(Graphic: http://link.reuters.com/mut58m)
"Gold retains its positive correlation to the dollar,
although ... this relationship continues to soften," said UBS
analyst Edel Tully.
On Tuesday, independent investor Dennis Gartman said in a
note that he has halved his gold holdings after recent selling.
Last Friday, Gartman said that he needed to reassess his
long-held strategy of buying euro-denominated gold.
[]
Among other precious metals, silver <XAG=> was at $17.68 an
ounce, against $17.51. Platinum <XPT=> was at $1,518 an ounce,
against $1,509, and palladium <XPD=> at $449 against $441.45.
(Additional reporting by Jan Harvey and Maytaal Angel in
London; Editing by Walter Bagley)
Prices at 3:16 p.m. EDT (1816 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCQ0> 1191.70 9.80 0.8% 8.7%
US silver <SIU0> 17.693 0.150 0.0% 5.0%
US platinum <PLV0> 1517.80 4.70 0.3% 3.2%
US palladium <PAU0> 451.05 7.15 1.6% 10.3%
Gold <XAU=> 1191.75 11.40 1.0% 8.7%
Silver <XAG=> 17.65 0.14 0.8% 4.8%
Platinum <XPT=> 1518.00 9.00 0.6% 3.6%
Palladium <XPD=> 449.50 8.05 1.8% 10.9%
Gold Fix <XAUFIX=> 1183.00 1.50 0.1% 7.2%
Silver Fix <XAGFIX=> 17.55 -23.00 -1.3% 3.3%
Platinum Fix <XPTFIX=> 1502.00 9.00 0.6% 2.5%
Palladium Fix <XPDFIX=> 438.00 7.00 1.6% 9.0%
