* Speculation over ECB action helps after Merkel comment
* Weak U.S. manufacturing, housing data boost stimulus hopes
* Global gold demand falls to two-year low-WGC
* Coming up: U.S. consumer sentiment Friday
(New details throughout, updates comment, changes byline,
dateline, previously LONDON)
By Frank Tang
NEW YORK, Aug 16 (Reuters) - Gold rose nearly 1 percent on
Thursday as comments by German Chancellor Angela Merkel and
disappointing U.S. manufacturing and housing data fueled
speculation that central banks may be set to launch more
bullion-friendly stimulus measures.
Platinum rose 3 percent as supply worries in South Africa
prompted investors to buy the metal. Labor unrest forced Lonmin
, one of the world's top platinum producers, to
cease production. South Africa accounts for three-quarters of
the world's platinum output.
Gold posted its biggest one-day gain in two weeks after
Merkel voiced support for European Central Bank President Mario
Draghi's crisis-fighting strategy. Data showing
contracting manufacturing activity in the U.S. mid-Atlantic
region and slow housing starts also raised hopes for Federal
Reserve stimulus.
Open interest, a liquidity gauge that measures the number of
outstanding long and short contracts, fell to a 2012 low for
U.S. gold futures on Wednesday, latest exchange data showed.
Doubts about central banks' commitment to take aggressive steps
to boost their economies have kept gold prices in a trading
range in the last four months.
"The open interest in gold is indicating rallies are mainly
short-covering now. Also, the upcoming Jackson Hole conference
with (Fed Chairman Ben) Bernanke hopefully discussing a stimulus
of some kind moved traders," said George Gero, vice president of
RBC Capital Markets.
Most Wall Street economists still expect the Federal Reserve
to do more to stimulate growth this year, with the majority
looking for action as soon as September after an annual meeting
of economists and central bankers in Jackson Hole, Wyoming, on
Aug. 31.
Spot gold gained 0.8 percent to $1,616.20 an ounce by
2:09 p.m. (1809 GMT).
U.S. COMEX gold futures for December delivery settled
up $12.60 at $1,619.20 an ounce, with trading volume about 30
percent below its 30-day average, preliminary Reuters data
showed.
Tame U.S. inflation data on Wednesday reassured investors
that price pressures would not prevent the Fed from launching
more quantitative easing - printing money to buy bonds in a bid
to keep interest rates low - if a more negative view of growth
emerges.
"My general view is that for the time being, major central
banks will let go of the mandate of price stability in favor of
spurring growth figures," LGT Capital Management analyst Bayram
Dincer said.
PHYSICAL DEMAND SOFT IN 2ND QUARTER
A closely watched report from the World Gold Council showed
on Thursday that demand for physical gold from jewelers and
investors fell in the second quarter to its lowest level since
the first three months of 2010.
Among other precious metals, silver was up 1.5
percent at $28.21 an ounce, while spot platinum was up
3.4 percent at $1,436.49 an ounce. Spot palladium was up
0.7 percent at $587.47 an ounce.
Lonmin, the world's No. 3 platinum miner, said that so far
it has lost 15,000 ounces of platinum production due to labor
unrest. South African riot police opened fire on striking miners
Thursday, killing at least a dozen men in the deadliest episode
of a week of union violence.
2:09 PM EDT LAST/ NET PCT LOW HIGH CURRENT
SETTLE CHNG CHNG VOL
US Gold DEC 1619.20 12.60 0.8 1603.00 1622.00 98,838
US Silver SEP 28.212 0.400 1.4 27.660 28.240 38,470
US Plat OCT 1435.20 39.00 2.8 1395.80 1442.80 12,391
US Pall SEP 583.45 5.40 0.9 574.60 589.30 5,014
Gold 1616.20 13.32 0.8 1601.51 1618.49
Silver 28.210 0.420 1.5 27.780 28.290
Platinum 1436.49 46.59 3.4 1399.25 1437.49
Palladium 587.47 4.02 0.7 578.25 585.25
TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG
US Gold 106,978 161,183 187,561 16.99 0.03
US Silver 54,756 39,526 56,557 22.85 -0.24
US Platinum 12,724 8,382 9,141 23 0.00
US Palladium 8,023 3,421 4,436
(Additional reporting by Jan Harvey in London)