PRECIOUS-Gold down on strong US data, ignores spending cuts
* No safe-haven bids as deep U.S. spending cuts seen gradual * SPDR Gold Trust holdings drop for eighth straight session * U.S. gold, silver coins post strong performance in Feb. * Coming up: U.S. government spending cuts to start Saturday (Adds market details, graphic link, updates prices) By Frank Tang NEW YORK, March 1 (Reuters) - Gold fell on Friday, posting its third straight weekly decline, as its reputation as a safe haven failed to attract buyers after strong U.S. economic data and global markets remained relatively calm ahead of wide-ranging U.S. government spending cuts. Bullion dropped as the dollar rose after U.S. economic data including consumer spending, consumer confidence and factory activity all pointed to a pickup in economic growth. Some investors believe a better U.S. outlook could prompt the Federal Reserve to halt its stimulus earlier than expected. Gold stayed weaker as the U.S. government was set to begin across-the-board federal spending cuts, known as "sequestration," that threaten to hinder the economic recovery, after President Barack Obama and congressional leaders failed to find an alternative budget plan. "The sequestration is not so supportive to gold itself because it is gradual and not going to generate a lot of turmoil," said Peter Buchanan, senior economist at CIBC World Markets. "However, the fact that the Republicans and Democrats have been unable to agree on that boast poorly for their ability to ward off an impasse over the debt ceiling in mid May," he said. Analysts now closely monitor how a divided Congress will deal with the next debt ceiling, which is scheduled to come into effect on May 18. Gold rallied to an all-time high in September 2011 a month after the United States lost its top-tiered credit rating that year. Spot gold was down 0.3 percent to $1,575.19 an ounce by 3:13 PM (2013 GMT). U.S. gold futures for April delivery settled down $5.80 at $1,572.30, with trading volume about 10 percent above 250-day average, preliminary Reuters data showed. Gold fell in tandem with sharp losses in other commodities such as copper and crude oil after poor economic data in China and the euro zone hurt sentiment. A flight to quality assets failed to materialize as global markets largely shrugged off the U.S. spending cuts. Rating agency Standard & Poor's on Friday said that U.S. budget cuts would likely have only limited effects. Gold is at a key juncture as prices are possibly working on a "double bottom" after a series of declines since its October high, said Mark Arbeter, chief technical strategist at S&P Capital IQ. (Graphic: link.reuters.com/qeh46t) A break above downward trendline resistance at $1,650 will break gold's bearish trend, Arbeter said. Silver, which tends to be more volatile and often tracks gold, was sharply off an earlier six-month low of $27.94. It was last traded unchanged at $28.51 an ounce. GOLD SILVER COINS OUTPERFORM ETFS Underlying investment demand for gold remain subdued. Holdings of the SPDR Gold Trust, the world's top gold ETF, dropped to a nearly seven-month low of 1,254.49 tonnes on Feb. 28 in its eighth straight session of decline, finishing February with a record monthly outflow of 73.6 tonnes. However, sales of American Eagle gold coins rose sharply year-on-year in February, and silver coin sales posted their strongest performance for the month since 1986, standing in sharp contrast to unprecedented ETF selling. Platinum group metal investors now digested slightly better U.S. auto sales. Platinum fell 0.6 percent to $1,569.99 an ounce, palladium dropped 0.8 percent to $720.47 an ounce. 3:13 PM EST LAST/ NET PCT LOW HIGH CURRENT SETTLE CHNG CHNG VOL US Gold APR 1572.30 -5.80 -0.4 1564.00 1586.90 176,969 US Silver MAY 28.49 0.058 0.2 27.925 28.790 51,083 US Plat APR 1573.50 -10.00 -0.6 1565.50 1588.90 14,108 US Pall JUN 720.40 -14.15 -1.9 715.75 732.90 4,558 Gold 1575.19 -4.57 -0.3 1565.45 1586.90 Silver 28.510 0.000 0.0 27.990 28.760 Platinum 1569.99 -10.00 -0.6 1568.00 1586.75 Palladium 720.47 -5.75 -0.8 718.02 731.00 TOTAL MARKET VOLUME 30-D ATM VOLATILITY CURRENT 30D AVG 250D AVG CURRENT CHG US Gold 193,477 201,263 177,166 15.12 0.16 US Silver 57,114 64,265 53,040 23.21 0.49 US Platinum 15,201 13,755 10,857 18.83 0.20 US Palladium 4,717 9,012 5,240 (Additional reporting by Clara Denina in London; Editing by David Gregorio and Martin Golan)
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