PRECIOUS-Gold slips below $1,400, down 2 pct on eco. optimism

Wed May 15, 2013 2:42pm EDT

* Gold down for fifth straight session, longest since Jan
2011
    * Gold buying in India muted after new restrictions
    * SPDR holdings unchanged at 33.8 million ounces on Tuesday

 (New updates throughout, adds comment, second byline, dateline)
    By Frank Tang and Clara Denina 
    NEW YORK/LONDON, May 15 (Reuters) - Gold slid below $1,400
an ounce on Wednesday, losing two percent and hitting its lowest
in nearly a month as a record rally in U.S. equities and
economic optimism undermined bullion's safe-haven appeal.
    The metal fell for a fifth straight session for its longest
daily losing streak since January 2011 as the S&P 500 hit
a new all-time high and Wall Street has risen for four
consecutive sessions. 
    "There is no reason to own gold as long as people keep on
putting money into the stock market. You can see it everywhere
that the economy is turning around," said Comex gold options
floor trader Jonathan Jossen.
    A pause in strong physical demand after news India
restricted imports to cut trading deficit also weighed on gold. 
    Spot gold dropped as much as 2.5 percent to
$1,390.24, its lowest since April 19. It was down 2 percent at
$1,396.94 an ounce by 2:09 p.m. EDT (1809 GMT).
    Analysts expect the fall below the psychologically
significant $1,400 level could be a trigger for further heavy
selling and might retest two-year lows of $1,321.35 an ounce hit
on April 16.
    Wednesday's fifth consecutive daily fall would be its
longest run of losses since January 2011. It has fallen around
15 percent so far in 2013 after gaining in each of the past 12
years.
    U.S. Comex gold futures for June delivery settled
down $28.30 at $1,396.20 an ounce, with trading volume on track
to finish near its 30-day average, preliminary Reuters data
showed.
    A stronger dollar and initial heavy losses in crude oil also
weighed on gold.  
    As a gauge of investor sentiment, holdings at SPDR Gold
Trust, the largest gold-backed ETF, were unchanged at 33.8
million ounces on Tuesday, but still within sight of their
lowest since March 2009 hit earlier. 
    Later on Wednesday, investors will find out gold investments
held by prominent hedge fund managers led by John Paulson at the
end of the first quarter. Funds and institutional investors are
required to file with the Securities and Exchange Commission 45
days after the end of each quarter.
   
    INDIA RESTRICTS GOLD IMPORTS
    Gold buying in India came to a halt as the country's central
bank restricted imports after a surge in buying in April sent
the trade deficit to $17.8 billion for the month, up more than
72 percent from March.  
    India's gold and silver imports surged 138 percent on the
year in April as customers took advantage of lower prices,
increasing pressure on the current account balance and limiting
the space for monetary easing.
    "With India doing its best through taxation to limit gold
buying, the demand from there is not as big as it was the last
time we were at these levels," Marex Spectron head of precious
metals David Govett said.
    In other precious metals, silver fell 2.7 percent to
$22.72 an ounce, platinum was down 0.5 percent to
$1,489.24 an ounce and palladium dropped 0.1 percent to
$725.72 an ounce.
 2:09 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold JUN   1396.20 -28.30  -2.0  1389.00 1429.40  204,045
 US Silver JUL  22.658 -0.721  -3.1   22.445  23.450   53,408
 US Plat JUL   1490.70 -11.20  -0.7  1468.70 1507.00   13,506
 US Pall JUN    729.05   1.90   0.3   717.55  731.95    5,040
                                                               
 Gold          1396.94 -28.45  -2.0  1391.08 1430.24         
 Silver         22.720 -0.640  -2.7   22.530  23.480
 Platinum      1489.24  -7.26  -0.5  1475.50 1504.00
 Palladium      725.72  -0.78  -0.1   719.75  729.22
                                                               
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        225,863   230,021   178,459     24.13    2.00
 US Silver       57,563    79,381    55,123     29.64    1.76
 US Platinum     14,445    12,075    11,802     19.62   -0.09
 US Palladium     6,004     5,510     5,023                  
                                                               
 
 (Additional reporting by A. Ananthalakshmi in Singapore;
Editing by David Cowell and Andrew Hay)
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