PRECIOUS-Gold gives up gains to drop nearly 1 pct on U.S. housing data

Tue Nov 26, 2013 3:39pm EST

* Strong U.S. housing data leads to Fed tapering worries
    * Asian physical demand slows
    * SPDR Gold ETF holdings down again
    * Coming up: US durable goods Wednesday

 (Adds trader comment, updates market activity)
    By Frank Tang and Clara Denina 
    NEW YORK/LONDON, Nov 26 (Reuters) - Gold fell nearly 1
percent on Tuesday, retreating from a one-week high set earlier
in the session, as encouraging U.S. housing activity stirred
fears the Federal Reserve will soon decide to reduce its
bond-buying stimulus program.
    Bullion came under pressure after data showed permits for
future U.S. home construction hit a near 5-1/2 year high in
October, and a report showed the S&P/Case Shiller composite
index of home prices in 20 metropolitan areas jumped 13.3
percent in September. 
    The reports were the latest signs of strength in the
economy, despite headwinds from rising mortgage rates and last
month's partial government shutdown.
    "The positive building permits and Case Shiller numbers are
signalling the possibility that tapering is back on the table,
weighing down on the gold," said Thomas Capalbo, a precious
metals broker at New York futures brokerage Newedge.
    Spot gold was down 0.9 percent at $1,241.24 an ounce
by 3:05 p.m. EST (2005 GMT), having earlier hit $1,256.49 in
early trading, its highest since Nov. 20. 
    U.S. gold futures outperformed spot bullion, and they
settled up 20 cents at $1,241.40 an ounce.
    Trading volume was at 282,600 lots, preliminary Reuters data
showed, nearly double its 30-day average of 156,000 lots and
largely boosted by the December-February contract rollover ahead
of the December contract's first-notice day on Friday.
    Some investors reduced their bullish bets after a rally
driven by buying related to Comex December option expiry on
Monday, said Frank McGhee, head precious metals dealer at
Chicago commodities brokerage Alliance Financial LLC.
    A higher S&P 500 equities index on the bright housing
data also weakened gold's safe-haven appeal, traders said. 
    
    LOW DEMAND
    Asian physical demand, which usually provides a floor for
prices, has failed to pick up the way it did earlier this year
when prices fell more than $200 an ounce in two days, dealers
said. 
    Outflows from gold funds continued, with SPDR Gold Trust
, the world's largest gold-backed exchange-traded fund,
losing 3.30 tonnes on Monday. Outflows from the ETF, about 450
tonnes so far this year, have played a big role in denting
prices. 
    Silver fell 2.4 percent to $19.81 an ounce, having
fallen to its lowest level since early August at $19.54 in the
previous session.
    Platinum dropped 1.2 percent to $1,367.30 an ounce,
while palladium slipped 0.5 percent to $715.47 an ounce.
    
 3:05 PM EST     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold DEC   1241.40   0.20   0.0  1239.20 1257.80  159,482
 US Silver DEC  19.848 -0.034  -0.2   19.785  20.290   48,356
 US Plat JAN   1371.90  -5.90  -0.4  1368.50 1391.70    6,982
 US Pall DEC    716.20  -3.70  -0.5   711.20  724.15    6,005
                                                              
 Gold          1241.24 -10.97  -0.9  1240.25 1256.49         
 Silver         19.810 -0.490  -2.4   19.820  20.300
 Platinum      1367.30 -16.94  -1.2  1371.75 1389.50
 Palladium      715.47  -3.25  -0.5   715.25  722.25
                                                              
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        282,604   156,740   159,380      19.2   -0.79
 US Silver       87,971    52,679    54,438     26.32    1.33
 US Platinum      7,224     9,465    12,987     16.77    0.22
 US Palladium    13,165     7,706     5,844     20.82    1.06
                                                              
   

 (Additional reporting by A. Ananthalakshmi in Singapore.;
Editing by James Jukwey, Andre Grenon and Jim Marshall)