PRECIOUS-Gold up 2 pct to above $1,360 on technical breakout
* Rally above $1,350 key resistance sets off buy-stop orders
* Sharp price gains prompt speculators to cover shorts
* SPDR Gold Trust posts rare inflows
* Silver posts best seven-day rally since October 2008
* Coming up: US housing permits, consumer sentiment Friday
(Adds comments, details on gold ETF, fund position changes, updates market action) NEW YORK/LONDON, Aug 15 (Reuters) - Gold rose to a near two-month high on Thursday, gaining nearly 2.5 percent as a drop in the U.S. dollar triggered short-covering and a technical breakout once prices breached key resistance at $1,350 an ounce. Silver climbed almost 6 percent to extend its winning streak to a seventh session. Platinum and palladium also rose sharply. After trading lower earlier in the session, gold staged an impressive $50 rally as the dollar reversed gains after data gave conflicting pictures of the strength of the U.S. economic recovery, muddying views on when the U.S. Federal Reserve will begin trimming its stimulus measures. Speculators, who have boosted their short position on gold since its mid-April sell-off, opted to buy futures to cover their bearish bets as gold rose above the $1,350 mark, an area bullion attempted to breach several times in the past two months but failed each time. "Today's move was mostly driven by technicals, and that spooked the bearish bets out of the gold market," said Axel Merk, chief investment officer at California-based Merk Funds, which manages about $500 million of currency mutual-fund assets. Spot gold was up 2.3 percent at $1,365.60 an ounce at 2:59 p.m. EDT (1859 GMT), having hit $1,369.40, its highest level since June 19. U.S. Comex gold futures for December settled up $27.50 at $1,360.90 an ounce, with trading volume less than 20 percent above its 30-day average, preliminary Reuters data showed. Relatively low volume in the quieter summer months suggests that the metal could easily give up its gains, traders said. Earlier, the metal fell as much as 1.1 percent to a low of $1,318.81 an ounce after data showed U.S. jobless claims fell to a near six-year low last week and the consumer price index (CPI) rose broadly in July. On Wednesday, U.S. data showed the producer price index (PPI) was flat in July. "I would rather not own gold today. The benign CPI, PPI and Personal Consumption Expenditure (PCE) all suggest that inflation is not picking up," said Jeffrey Sherman, commodities portfolio manager at DoubleLine, an asset manager with about $57 billion in assets under management.
GOLD ETF INFLOW, PAULSON CUTS STAKE Holdings of SPDR Gold Trust, the world's largest gold exchange-traded fund, rose 0.2 percent to 913.23 tonnes on Wednesday, raising hopes that the worst of the outflow from the fund is over. Investors must also digest news that many top U.S. hedge funds, including longtime bull John Paulson, have reduced, and in some cases completely disposed of, their stakes in SPDR Gold Trust. Silver was up 5.7 percent at $22.89, having earlier set a near three-month high at $23.14 on ounce. The grey metal extended its rally to a seventh straight day, notching its biggest seven-day rise, 18.5 percent, since October 2008. Platinum was up 1.8 percent at $1,523.24 an ounce, while palladium gained 3.1 percent to $759.97 an ounce.
2:59 PM EDT LAST/ NET PCT LOW HIGH CURRENT SETTLE CHNG CHNG VOL US Gold DEC 1360.90 27.50 2.1 1317.90 1369.60 213,020 US Silver SEP 22.935 1.148 5.3 21.705 23.190 82,778 US Plat OCT 1532.30 27.10 1.8 1500.60 1536.00 12,897 US Pall SEP 756.85 16.50 2.2 739.95 769.50 8,371 Gold 1365.60 31.01 2.3 1319.81 1369.40 Silver 23.060 1.240 5.7 21.760 23.140 Platinum 1523.24 26.44 1.8 1505.50 1531.00 Palladium 759.97 22.97 3.1 742.02 766.00 TOTAL MARKET VOLUME 30-D ATM VOLATILITY CURRENT 30D AVG 250D AVG CURRENT CHG US Gold 223,269 192,310 188,616 21.53 -1.50 US Silver 97,256 47,154 53,943 29.86 1.01 US Platinum 13,315 9,039 12,524 20.89 0.00 US Palladium 9,109 3,685 5,255
(Additional reporting by Clara Denina in London, A. Ananthalakshmi in Singapore; Editing by Veronica Brown, Keiron Henderson and Peter Galloway)