PRECIOUS-Gold falls after 5-day rise as Syria attack fears ease

Thu Aug 29, 2013 2:44pm EDT

* U.S. economic growth accelerates in second quarter
    * Dollar rallies; oil falls
    * India considers plan for banks to buy gold from citizens
    * Coming up: U.S. personal income data on Friday

 (Updates market activity)
    By Frank Tang and Clara Denina 
    NEW YORK/LONDON, Aug 29 (Reuters) - Gold fell on Thursday,
snapping a five-day rally as a U.S.-led military strike on Syria
appeared not to be imminent and investors turned their attention
to strong U.S. economic growth and the Federal Reserve's plans
to rein in its stimulus program.
    President Barack Obama told Americans on Thursday that a
military strike against Syria was in their interest following a
gas attack against Syrian civilians last week, and Britain said
armed action would be legal. But intervention appeared likely to
be delayed until U.N. investigators report back. 
    A U.S. government report showed the nation's economy
accelerated more quickly than expected in the second quarter
because of a surge in exports, bolstering the case for the
Federal Reserve to wind down a major economic stimulus program.
    "Gold is down on better GDP and as the risk of imminent
military strikes is fading," said Frank McGhee, head precious
metals trader at Integrated Brokerage Services LLC. "The market
can sell off pretty hard tomorrow if we don't hear anything
concrete about attacks on Syria."    
    The metal's appeal as a hedge against inflation decreased
after the GDP data. Before Thursday's drop, gold rallied 5
percent in the last five sessions as rising geopolitical
tensions boosted safe-haven bids. 
    Spot gold was down 0.4 percent to $1,412 an ounce by
2:03 p.m. EDT (1803 GMT). 
    The metal is on track for its fourth consecutive weekly gain
and its second straight monthly rise.
    U.S. Comex gold futures for December delivery settled
down $5.90 at $1,412.90 an ounce, with trading volume about 30
percent below its 30-day average, preliminary Reuters data
showed. 
    Gold came under pressure as the GDP data boosted the dollar
index and sent crude oil futures prices lower after their
recent sharp rally due to fears of supply disruptions from the
Middle East.  

    INDIA'S IMPORT CURBS
    Demand for physical gold in Asia slowed this week as spot
prices surged and emerging-market currencies plunged. Premiums
in Singapore, Hong Kong and Tokyo all fell from two weeks ago.
 
    India is considering a plan to direct commercial banks to
buy gold from ordinary citizens and divert it to precious metal
refiners in an attempt to curb imports and take some heat off a
plunging rupee, sources familiar with the Reserve Bank of India
told Reuters. 
    India's Trade Minister Anand Sharma's talk of possible
monetization of India's gold holdings also weighed on gold
prices. 
    Analysts said that while bullion sales by India might
devastate gold prices, it was still unclear if the government
was committed to the drastic policy. 
    India, the world's biggest gold consumer, has already taken
a number of steps to lower its imports of the metal and reduce
its current account deficit. 
    Among other precious metals, silver fell 1.3 percent
to $24.03 an ounce, retreating from a 3-1/2 month high of $25.08
hit on Wednesday. Platinum dropped 0.8 percent to
$1,518.99 an ounce, while palladium was down 1.2 percent
at $734.22 an ounce. 
    
 2:03 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold DEC   1412.90  -5.90  -0.4  1402.10 1418.60  133,156
 US Silver SEP  24.090 -0.301  -1.2   23.660  24.415   18,232
 US Plat OCT   1522.40 -17.70  -1.1  1518.80 1541.40    7,465
 US Pall SEP    737.75  -8.30  -1.1   735.85  744.45    1,822
                                                              
 Gold          1412.00  -5.64  -0.4  1403.33 1417.91         
 Silver         24.030 -0.310  -1.3   23.700  24.400
 Platinum      1518.99 -11.61  -0.8  1521.50 1537.00
 Palladium      734.22  -8.78  -1.2   739.50  744.00
                                                              
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        145,459   181,520   186,558     23.72   -0.46
 US Silver       82,497    61,180    57,839      36.6    0.19
 US Platinum      8,005     9,400    12,240     20.53    0.00
 US Palladium     6,695     5,958     5,702                  
                                                              
    

 (Additional reporting by A. Ananthalakshmi in Singapore;
Editing by Jason Neely, Jane Baird, Lisa Von Ahn and Jim
Marshall)
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