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Gold Poised to Gain as U.S. Output Data Boosts Easing Prospects

Gold may gain as manufacturing in the U.S. trailed estimates, boosting prospects of further stimulus by the Federal Reserve to spur growth and increasing demand for bullion as a haven.

Spot gold was at $1,599.03 an ounce by 10:37 a.m. in Singapore, after ending little changed at $1,597.10 yesterday. August-delivery bullion was little changed at $1,599.20 an ounce on the Comex in New York, after dropping 0.4 percent yesterday.

Manufacturing in the U.S. shrank in June to 49.7, worse than the most-pessimistic forecast in a Bloomberg News survey, from 53.5 in May, data yesterday showed, helping the dollar rebound from its biggest drop in eight months against a six- currency basket including the euro. The common currency fell today as euro-area unemployment reached the highest on record in May, raising concern the debt crisis is worsening.

“Gold lacks direction, but sees a stronger quarter ahead as spotlight returns to the U.S. economy,” Lynette Tan, an investment analyst at Phillip Futures Ltd., wrote in an e-mail today. “Gold prices have been sensitive to signs of economic weakness, which tend to increase the likelihood of monetary easing by the Federal Reserve.”

Cash gold last week capped its worst quarter since the three months to September 2008, as the Dollar Index rallied 3.3 percent, after the Fed didn’t buy more debt and instead extended a program of replacing short-term bonds with longer-term debt.

Spot silver was little changed at $27.5275 an ounce, after swinging between gains and losses. Cash platinum dropped as much as 0.6 percent to $1,446.50 an ounce, and was last at $1,452.50. Palladium fell for a second day, declining as much as 0.6 percent to $574.75 an ounce, before trading at $575.75.

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