PRECIOUS-Gold down but off two-week low, EU debt crisis eyed

Wed Sep 26, 2012 4:45pm EDT

* Gold hits two-week low, dollar gain weighs
    * Development in euro zone debt crisis in focus
    * Gold ETF hit record, new inflows seen into New York fund
    * Coming up: U.S. jobless claims on Thursday

 (Recasts, updates comment, market activity, changes byline,
dateline, previous LONDON)
    By Frank Tang
    NEW YORK, Sept 26 (Reuters) - Gold prices ended down on
Wednesday but off an earlier two-week low as a stronger dollar
and weaker crude oil triggered profit-taking after bullion's
recent sharp rally boosted by stimulus by central banks around
the world. 
    The metal was weighed down by gains in the U.S. dollar after
data showed new U.S. home sales held near two-year highs in
August and prices vaulted to their highest in more than five
years. 
    Bullion has extended its losses to a third straight day. It
is still 3.5 percent higher for the month following a sharp
rally on hopes the central banks will keep the credit flowing by
offering bullion-friendly stimulus.
    On Tuesday, gold fell as large-scale protests against
anti-austerity measures in Spain rekindled fears about the
European Union's three-year-old debt crisis.
    "Investors will be keeping a close eye on the events in the
EU," said Sean Lusk, precious metals analyst at futures
brokerage Ironbeam. 
    "As we are at the month- and quarter-end, today's selloff
probably encompassed some profit taking in the precious metals,"
Lusk said.
    Spot gold was down 0.5 percent at $1,751.50 an ounce
by 3:51 p.m. EDT (1951 GMT), recovering from a two-week low
reached earlier in the session at $1,737.50 an ounce.
    U.S. gold futures for December delivery settled down
$12.80 at $1,753.60, with trading volume about 10 percent above
its 250-day average.
    Worries over the euro zone debt crisis, as Greece faced its
biggest anti-austerity strike for months and Spain's central
bank suggested the country's recession was deepening, also
knocked European shares and crude oil futures sharply lower.
 
    
    GOLD INVESTMENT FIRMS
    Investment in gold has been firm, with holdings of
gold-backed exchange-traded funds rising by nearly 300,000
ounces on Tuesday, according to Reuters data, to
a record 74.063 million ounces, with most fresh flows moving
into the SPDR Gold Trust.
    Silver rose 0.7 percent to $33.93 an ounce. Spot
platinum was up 0.5 percent at $1,628.20 an ounce, while
palladium was down 1.1 percent at $624 an ounce.
    Platinum prices have retreated from the 6-1/2-month highs
they hit this month after violence linked to labor unrest at a
mine operated by number three producer Lonmin in South Africa
led to 45 deaths.
    
 3:51 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold DEC   1753.60 -12.80  -0.7  1738.30 1768.40  177,268
 US Silver DEC   33.94 -0.008   0.0   33.360  34.110   46,162
 US Plat OCT   1634.40   2.60   0.2  1612.30 1636.20   10,535
 US Pall DEC    625.85 -15.00  -2.3   617.45  640.95    3,991
                                                              
 Gold          1751.50  -8.54  -0.5  1738.48 1765.40         
 Silver         33.930  0.230   0.7   33.380  34.040
 Platinum      1628.20   7.70   0.5  1616.25 1633.00
 Palladium      624.00  -7.20  -1.1   619.77  638.25
                                                              
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        196,471   153,788   183,917     16.65   -0.54
 US Silver       48,275    59,146    52,839     35.84    7.55
 US Platinum     22,355    20,017     9,400     22.75   -0.90
 US Palladium     4,020     8,643     4,663                  
                                                              
   

 (Additional reporting by Jan Harvey in London; Editing by James
Dalgleish)