PRECIOUS-Gold falls on credit downgrade fears, tracks euro

Tue Feb 14, 2012 3:34pm EST

Related Topics

* Gold down on euro downgrade fears, weak US retail sales
    * Greece in focus ahead of euro zone finmin meeting Weds
    * Rising trendline since December broken - Dennis Gartman
    * Coming up: US hedge funds to report Q4 holdings later
Tues

 (Updates comment, market activity, adds link to graphic)	
    By Frank Tang and Amanda Cooper	
    NEW YORK/LONDON, Feb 14 (Reuters) - Gold dropped
 on Tuesday as the dollar rallied versus the euro on
renewed fears of credit downgrades in major European economies
and uncertainty over Greece's bailout.	
    Bullion slid with the euro after Moody's warned it may cut
its triple-A credit ratings of France, Britain and Austria. The
ratings agency cited the euro zone debt crisis.	
    Weaker-than-expected U.S. retail sales data also cut
investors' risk appetite, even though economists said the
pick-up in sales excluding autos provided a firm footing for
economic recovery. 	
     Spot gold was down 0.4 percent at $1,715.60 an
ounce by 2:13 p.m. EST (1913 GMT), having touched an intraday
low of $1,711.70 earlier in the day.	
    U.S. gold futures for April delivery settled down
$7.20 at $1,717.70. Trading volume was 20 percent below its
30-day average but higher than its previous session's.	
    Analysts expect the precious metal to trade in a range for
the forseeable future.	
    "Any rallies will be capped against the overall potential
of an economic slowdown, absent truly new actions by the
European governments," Frank McGhee, head precious metals
trader at Integrated Brokerage Services LLC. 	
    "I'm not surprised to see gold working in a trading range
in next couple of weeks," he said.	
    Technical selling weighed on gold again when it failed to
rise above Monday's high around $1,730 an ounce. Last week,
gold encountered heavy technical selling around $1,750 an
ounce, 	
the highs set in early December.	
    "We are concerned about gold's immediate future in light of
the chart of gold in dollar terms. The trend line that has
defined gold's rise since late December has been broken," said
Dennis Gartman, a veteran trader.
     
  	
    Gold has slipped in February after rising 11 percent in
January, when it was boosted by the Federal Reserve's nero-zero
interest rate outlook for nearly three more years.	
    Federal Reserve policymakers on Tuesday are turning to cars
to illustrate just how split they are over what if anything to
do about the U.S. economy, with some eying the brake pedal and
others the gas. 	
 	
    KEY EURO ZONE MEETING EYED	
    While the Moody's news rattled the markets, focus remained
on Greece, which has acknowledged it still has much to do to
persuade the European Union and International Monetary Fund to
save it from a chaotic default.	
    Euro zone finance ministers have asked the Greek government
for details of how it will fill a massive gap in its plan for
extra savings this year ahead of a key meeting on Wednesday.	
    Gold remains more sensitive to moves in the euro in the
short term than to rising risk aversion. The euro zone debt
crisis has been a positive driver of prices last year. 	
    The gold market now awaits U.S. regulatory filings from
money managers which will show their holdings during the fourth
quarter of 2011. While the filings mostly look backward, they
provide the best insight into where hedge funds are placing
their bets. 	
    Among other precious metals, silver was down 0.7
percent at $33.44 an ounce. Spot platinum was down 1.4
percent at $1,621.24 an ounce, while spot palladium was
down 1.8 percent at $682.72 an ounce.	
    Platinum prices fell after a recent rally on the back of
supply outages in major producer South Africa.	
    	
 2:13 PM EST     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold APR   1717.70  -7.20  -0.4  1713.80 1729.90  133,254
 US Silver MAR  33.348 -0.374  -1.1   33.255  33.845   38,940
 US Plat APR   1628.00 -21.70  -1.3  1624.00 1653.20    7,350
 US Pall MAR    687.25 -11.30  -1.6   683.10  700.50    3,898
 
 Gold          1715.60  -6.89  -0.4  1712.58 1727.31         
 Silver         33.440 -0.250  -0.7   33.280  33.820
 Platinum      1621.24 -22.84  -1.4  1625.50 1650.00
 Palladium      682.72 -12.50  -1.8   685.50  698.00
 
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        151,321   192,978   194,098     20.15   -0.10
 US Silver       51,800    45,218    42,491     32.92   -0.18
 US Platinum      7,507     7,414     7,614     19.82    0.15
 US Palladium     4,908     4,147     4,306                  
 
 	
 (Additional reporting by Jan Harvey in London; Editing by
Marguerita Choy; and David Gregorio)
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