PRECIOUS-Gold heads for biggest weekly drop since December

Fri Feb 15, 2013 2:56am EST

* Gold drops to lowest in six weeks
    * Spot gold to slide to $1,622 -technicals 
    * Coming up: U.S. Industrial output; 1415 GMT

 (Updates prices, adds premiums in Singapore, HK)
    By Lewa Pardomuan
    SINGAPORE, Feb 15 (Reuters) - Gold fell to a six-week low on
Friday and was headed for its biggest weekly drop since December
as investors sold the precious metal to cover losses in equity
markets, while a softer euro also weighed on prices.
    The euro nursed heavy losses, while shares in Asia
eased with investors turning cautious as weak euro zone growth
data presaged a bleak outlook ahead of a G20 meeting in this
session and on Saturday in Moscow.  
    Gold hit a low of $1,629.89 an ounce, its weakest
since early January, and stood at $1,633.61 by 0713 GMT, down 85
cents. Gold was headed for a 2 percent drop this week.  
    "It looks bearish at this time, so we might see $1,600. (But
we first) have to breach $1,625," said Brian Lan, managing
director of GoldSilver Central Pte Ltd in Singapore, adding that
there was no physical buying from China which was away on a
week-long Lunar New Year break.
    "Hopefully, next week when China comes in, we will see more
support on gold." 
    Gold ended up around 7 percent in 2012 - its 12th straight
year of gains in one of the longest bull runs ever for a
commodity. But worries about gold appetite have emerged with
data showing global demand fell last year for the first time
since 2009 as jewellery buying abated in the key Indian and
Chinese markets, and as U.S. and European coin and bar
investment dropped. 
    U.S. gold fell $1.70 an ounce to $1,633.80.    
    
    The market is now waiting for the outcome of the G20 meeting
and its impact on currency markets to give fresh trading cues to
bullion, which has come under pressure after data showed the
euro zone slipped deeper into recession in late 2012 than had
been expected. 
    German Finance Minister Wolfgang Schaeuble said on Friday
exchange rates should reflect market conditions and he believed
the Group of 20 would take the same position on currency
exchange rates as that already expressed by the Group of Seven.
 
     A firmer Japanese currency dragged on yen-based gold,
platinum and palladium futures on the Tokyo Commodity Exchange
  . 
    TOCOM palladium rallied to its highest since mid-2001 this
week on hopes of rising demand from auto makers in China.
    "Palladium demand is steady but we don't see much interest
in platinum. The demand for palladium comes from the industrial
sector at this moment," a physical dealer in Tokyo said.
    "The discounts for gold bars have narrowed to 50 to 75 cents
because TOCOM is down, so we are seeing fewer people selling
their gold back to us," said the dealer, referring to retail
investors in Japan.
    Gold bars were offered at discounts of 75 cents to $1 to
spot London prices in Tokyo this week.
    Premiums were at $1 to $1.50 in Hong Kong and $1.20 an ounce
in Singapore. 
     Palladium and platinum have outperformed gold so far this
year on an improving global economy and after mining disruptions
in South Africa, as well as a drop in supply from Russia,
triggered fears of a deficit in the metals used in jewellery and
auto catalysts.
    Holdings of the largest gold-backed exchange-traded-fund
(ETF), New York's SPDR Gold Trust, fell 0.23 percent on
Thursday from Wednesday, while those of the largest
silver-backed ETF, New York's iShares Silver Trust, rose
0.26 percent during the same period. 
    
  Precious metals prices 0713 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1633.61   -0.85   -0.05     -2.44
  Spot Silver        30.35   -0.02   -0.07      0.23
  Spot Platinum    1690.49  -17.00   -1.00     10.13
  Spot Palladium    760.75   -2.25   -0.29      9.93
  COMEX GOLD APR3  1633.80   -1.70   -0.10     -2.51        21447
  COMEX SILVER MAR3  30.36    0.01   +0.02      0.43         3861
  Euro/Dollar       1.3371
  Dollar/Yen         92.61
 
  COMEX gold and silver contracts show the most active months
   

 (Editing by Joseph Radford and Himani Sarkar)