PRECIOUS-Gold falls, US data feeds worry Fed could curb stimulus

Fri Oct 12, 2012 4:11pm EDT

* Gold posts biggest weekly decline since end of June
    * Some investors see recovery due to "fiscal cliff"
    * China, India physical demand falls, gold ETF holdings down
    * Coming up: U.S. retail sales Monday


    By Frank Tang
    NEW YORK, Oct 12 (Reuters) - Gold fell nearly 1 percent on
Friday, its biggest daily drop in more than two months, as
improving U.S. consumer sentiment and jobs data stirred concern
the Federal Reserve might curb the monetary stimulus that has
boosted gold prices.
    For the week, gold fell 1.5 percent, its largest weekly loss
since the last week of June. 
    "We are starting to see some improvement in the U.S.
economy, so the duration of a quantitative easing plan may not
be as long as what was initially anticipated," said Phillip
Streible, senior commodities broker at futures brokerage R.J.
O'Brien.    
    "People who buy gold as an inflation play are starting to
step out of the market," Streible said.
    Bullion fell after data showed U.S. consumer sentiment
unexpectedly rose to a five-year high. On Thursday, weekly U.S.
jobless claims showed a surprise drop, more evidence of a
stronger labor market after the unemployment rate fell to a
four-year low of 7.8 percent last week. 
    Some analysts expected gold to rebound because of euro zone
debt worries and economic uncertainty amid prospects of a U.S.
"fiscal cliff" of automatic spending cuts and tax increases
scheduled for January. That scenario could shock the economy and
lead to more money printing from the Fed.
    Spot gold fell 0.8 percent to $1,754.10 an ounce by
3:11 p.m. EDT (1911 GMT). The metal has now ended lower in five
of its last six sessions.
    U.S. COMEX gold futures for December delivery settled
down $10.90 at $1,759.70, with trading volume at 40 percent
lower than its 30-day average, preliminary Reuters data showed.
    Silver was down 1.4 percent at $33.52, heading for a
weekly loss of more than 2 percent.
    Bullion posted four straight monthly increases prior to
October.  Gold jumped to an 11-month high last Friday, but
failed to rise above $1,800 an ounce, triggering technical
weakness.
 
    PHYSICAL BUYING SLOWS
    In top gold consumer India, dealers said that physical
bullion demand was weak as a soft rupee has pushed up local gold
prices.
    Holdings of gold-backed exchange-traded funds
 also fell for the first time in two weeks on
Thursday, but were still close to a record high. 
    Platinum group metals fell in the absence of fresh news from
South Africa, where industrial unrest has shuttered the
operations of major platinum miners including Anglo American
Platinum, the world's largest producer of the metal.
    Spot platinum was 1.6 percent lower at $1,647.20 an
ounce, while palladium fell 2.8 percent to $633 an ounce.

 3:11 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold DEC   1759.70 -10.90  -0.6  1753.50 1775.00  117,604
 US Silver DEC  33.669 -0.413  -1.2   33.510  34.165   35,675
 US Plat JAN   1659.30 -30.30  -1.8  1655.50 1691.30    8,034
 US Pall DEC    639.05 -11.85  -1.8   635.00  653.45    3,134
                                                              
 Gold          1754.10 -14.09  -0.8  1753.05 1773.10         
 Silver         33.520 -0.470  -1.4   33.490  34.120
 Platinum      1647.20 -27.10  -1.6  1657.00 1683.24
 Palladium      633.00 -18.30  -2.8   638.00  651.50
                                                              
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        122,857   172,110   174,094     15.58   -0.25
 US Silver       37,751    53,154    56,876        35    7.00
 US Platinum      8,157    15,902     9,735      20.1   -0.07
 US Palladium     3,159     4,377     4,807
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