* Gold supported as US housing starts fall to record lows
* Long-dated call options buying improves sentiment
* VIX falls below 30 for first time in eight months,
(Updates with quotes, closing prices; adds NEW YORK to
dateline)
By Frank Tang and Veronica Brown
NEW YORK/LONDON, May 19 (Reuters) - Gold was firmer on
Tuesday as an unexpected fall in U.S. housing starts to record
lows in April sharpened risk aversion and pressured the dollar,
supporting the metal's appeal as a safe store of value.
Spot gold <XAU=> traded at $925.85 an ounce at 3:10 p.m.
EDT (1910 GMT), up 0.9 percent from its late Monday quote of
$917.20 quote in New York on Monday.
U.S. gold futures for June delivery <GCM9> settled up $5 at
$926.70 an ounce on the COMEX division of the New York
Mercantile Exchange.
New U.S. housing permits and starts unexpectedly fell to
record lows last month, a government report showed, denting
expectations stability in the housing market was imminent.
[]
"Gold still seems to be caught amidst heightened risk
aversion and rising optimism in the global equity markets,"
said Richcomm Global Services senior analyst Pradeep Unni.
A better appetite for stocks is diverting some investment
for bullion, analysts said. U.S. stocks turned slightly
positive in late sessions. []
However, safe-haven demand could diminish as the closely
watched Volatility Index <.VIX> fell below 30 for the first
time in eight months, indicating the perceived need for
portfolio insurance is diminishing. []
Some investors have plugged into gold to hedge equally
against potential for the positive mood to sour and
inflationary problems posed by quantitative easing.
Jonathan Jossen, a COMEX gold options floor trader, said
that buying of long-dated call options and option writing by
gold producers helped the underlying gold futures
"The gold options market is slightly bullish for the first
time in a while. If June futures can take out important
resistance at at $929.50, we can possibly go to $948.50,"
Jossen said.
On Friday, bullion hit a seven-week high of $933.65 per
ounce after data showed U.S. core inflation in April rose more
than expected.
SHORT-TERM WOBBLE?
Other analysts, however, said that the market could see
some seepage in the short-term after several failed attempts to
capture and hold support.
"Gold was overbought and failed in the low $930s again
yesterday, so needs a correction," said Simon Weeks, director
of gold sales at ScotiaMocatta in London.
Platinum <XPT=> was at $1,137 an ounce, up 0.8 percent from
its late Monday quote of $1,128.50, boosted by news U.S.
President Barack Obama would propose the most aggressive
increase in U.S. auto fuel efficiency ever, which could lift
usage of the metal to clean auto emissions.
The policy initiative would directly regulate emissions for
the first time and resolve a dispute with California over
cleaner cars. [].
London is playing host to the annual Platinum Week
gathering. For a TAKE-A-LOOK, see [].
Spot silver <XAG=> was at $14.21 an ounce, up 3.6 percent
from its previous finish of $13.72 late on Monday, while
palladium <XPD=> was at $231.50 an ounce, up 2.2 percent from
its previous finish of $226.50.
(With additional reporting by Jan Harvey; Editing by
Marguerita Choy)
