PRECIOUS-Gold eases after short-covering rally, tapering fears drag

Thu Dec 5, 2013 2:06am EST

* Gold, silver fall after sharp gains in previous session
    * Markets await U.S. GDP, nonfarm payroll data
    * SPDR sees outflows of 2.7 tonnes

 (Updates prices)
    By A. Ananthalakshmi
    SINGAPORE, Dec 5 (Reuters) - Gold edged lower on Thursday
following a short-covering rally in the previous session,
weighed down by concerns the U.S. Federal Reserve could soon
begin tapering its monetary stimulus on strong economic data. 
    Bullion prices rose the most in over a month on Wednesday
despite strong data on U.S. private-sector hiring and service
industry growth in the run up to the nonfarm payroll data on
Friday. 
    The short-covering gains came after gold hit fresh
five-month lows for three straight sessions.
    "The markets are still positioned quite short. There is
going to be a bigger reaction to a weaker-than-expected nonfarm
payrolls report than to stronger-than-expected numbers," said
Victor Thianpiriya, an analyst at ANZ.
    "If it's a strong report, it would just give the existing
shorts a bit more validation and we could see prices go back to
$1,220," he said.
    Prices risk falling to $1,180 - gold's three-year low hit in
June - if they drop below $1,215, Thianpiriya said. 
    Spot gold had fallen 0.4 percent to $1,237.94 an
ounce by 0659 GMT, after gaining 1.6 percent in the previous
session.
    Silver also edged lower after climbing nearly 3
percent in the previous session.
    Investors are in data-watch mode to determine how soon the
Fed could begin scaling back its $85 billion in monthly bond
purchases. 
    They worry that strong data could prompt the central bank to
taper from this month, with a policy meeting Dec. 17-18.  
    The bond-buying stimulus has strongly supported gold prices
as it boosts the metal's inflation-hedge appeal. 
    Holdings in SPDR Gold Trust, the world's largest
gold-backed exchange-traded fund, fell 2.70 tonnes to 838.71
tonnes on Wednesday - their lowest since early 2009. 
    
    PRICES AT 0659 GMT    
 Metal                Last       Change   Pct chg  YTD pct chg
                                                                
 Spot gold              1237.94    -5.27    -0.42         -26.07
 Spot silver              19.58    -0.09    -0.46         -35.34
 Spot platinum          1361.25    -7.25    -0.53         -11.32
 Spot palladium          721.47    -3.03    -0.42           4.26
 Comex gold Dec3           1238     -9.2    -0.74         -26.12
 Comex silver Dec3       19.595   -0.235    -1.19         -35.35
 Euro                    1.3624                                 
 DXY                     80.456                                 
                                                                
 COMEX gold and silver contracts show the most active months
 
 (Reporting by A. Ananthalakshmi; Editing by Richard Pullin,
Joseph Radford and Supriya Kurane)