PRECIOUS-Gold up 1 pct, extending rally after sharp 2013 losses

Fri Jan 3, 2014 2:44pm EST

* Gold up over 2 pct for week, largest weekly gain in 10
weeks
    * U.S. stocks ease, equities' weakness supports gold
    * Good gold coin buying, Chinese physical demand help
    * Coming up: U.S. factory orders Monday

 (Adds more comment, market details, updates market activities)
    By Frank Tang and Julia Fioretti
    NEW YORK/LONDON, Jan 3 (Reuters) - Gold rose 1 percent on
Friday, rallying for a second consecutive day with a boost from
renewed fund buying and equities' weakness after bullion posted
its worst annual decline in 2013 in more than 30 years.
    Brisk coin buying, strong Chinese physical demand and new
positions initiated by funds related to new-year index
rebalancing also helped lift gold to a weekly gain of more than
2 percent, its largely rise in 10 weeks.
    Analysts said gold appeared to find support from equities'
losses this week after bullion's tumble and the stock market's
strong run last year.
    "Positive bullion prices in reaction to the decline in
equities may set the tone for 2014 and reinforce the negative
correlation between the two," said James Steel, chief precious
metals analyst at HSBC.
    Spot gold was up 1.1 percent to $1,237.40 an ounce by
2:01 p.m. EST (1901 GMT).
    Traders also cited short covering for the metal's strength
as bullion has rallied more than 4 percent after hitting a
six-month low at under $1,200 an ounce on Tuesday. 
    U.S. Comex gold futures for February delivery settled
up $13.40 at $1,238.60 an ounce, with trading volume about 20
percent below its 30-day average, preliminary Reuters data
showed.
    Gold's gains came after it lost nearly 30 percent in 2013,
ending a 12-year bull run, largely due to the U.S. Federal
Reserve's plan to unwind its monetary stimulus.
    Bullion's second day of sharp gains came as U.S. stocks
eased on Friday, extending a broad decline in the new year with
major indexes on track to end the week lower. 
    Premiums on the Shanghai Gold Exchange showed that Chinese
buying has picked up in recent days as global prices hovered
around $1,200 near the end of 2013, dealers said.
    Also boosting gold market sentiment were brisk sales of the
U.S. Mint's new 2014-dated American Eagle gold coins on the
first business day of the year, extending last year's strength
boosted by gold prices' broad decline. 
    Some analysts, however, cautioned that the upward momentum
in the early days of the new year may only last a few weeks due
to some index rebalancing activity.
    A stronger U.S. dollar and heavy losses in crude oil prices
this week could pressure the precious metal as more participants
return next week following the recent holidays, said Edward
Meir, metals analyst at brokerage INTL FCStone.  
    Among other precious metals, silver rose 0.4 percent
to $20.08 an ounce. Platinum gained 0.4 percent to
$1,406.74, and palladium eased 0.1 percent to $725.72 an
ounce.
    Platinum group metals now digest news that the top four
automakers in the U.S. market missed December sales
expectations. However, 2013 will still easily be the best year
for the industry since before the recession. 
 2:01 PM EST     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold FEB   1238.60  13.40   1.1  1221.30 1239.60  101,552
 US Silver MAR  20.211  0.083   0.4   19.985  20.325   26,982
 US Plat APR   1414.20   9.60   0.7  1401.10 1418.00    6,057
 US Pall MAR    731.20   0.95   0.1   725.15  733.65    2,148
                                                               
 Gold          1237.40  12.89   1.1  1222.53 1240.00         
 Silver         20.080  0.080   0.4   20.020  20.300
 Platinum      1406.74   6.24   0.4  1404.25 1414.75
 Palladium      725.72  -0.53  -0.1   728.25  730.47
                                                               
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        108,445   130,519   187,175     19.96   -0.82
 US Silver       28,620    38,951    57,537     27.47   -2.22
 US Platinum      6,133    15,140    13,188     18.77    0.82
 US Palladium     2,230     3,304     5,856     19.61   -0.16
                                                               
    

 (Editing by William Hardy, Nick Zieminski and Chris Reese)