PRECIOUS-Gold falls as Wall St rises on U.S. retail sales data

Tue Jan 14, 2014 4:25pm EST

* Gold reverses early gains made on strong physical demand
    * S&P 500 rallies on strong U.S. retail sales data
    * U.S. Mint's silver coins sales strong on Monday
    * Coming up: U.S. producer prices Wednesday

 (Adds bullet points, details on physical demand, updates market
activity)
    By Frank Tang and Clara Denina 
    NEW YORK/LONDON, Jan 14 (Reuters) - Gold fell nearly 1
percent on Tuesday, snapping a three-day winning streak, as a
rally in U.S. equities that was sparked by encouraging December
retail sales data dampened buying sentiment among bullion
investors.
    The S&P 500 index was up 1 percent after the U.S.
Commerce Department said core retail spending posted a big jump,
a sign the economy was gathering steam at the end of last year
and was poised for stronger growth in 2014.
    Early in the session, gold rose to near a one-month high on
strong physical demand from Chinese investors, traders said.
    Analysts said gold's 3 percent gain early in 2014 was
supported by a drop in equities. Gold prices tumbled 28 percent
last year, when there was a record runup in stocks.
    "There is definitely negative correlation between gold and
equities. As of right now, it looks like it is going to
continue," said Adam Sarhan, chief executive of New York-based
Sarhan Capital.
    Spot gold was down 0.8 percent at $1,242.66 an ounce
at 3:05 PM EST (2005 GMT).
    U.S. COMEX gold futures for February delivery settled
down $5.70 at $1,245.40 an ounce, with trading volume about 10
percent below the 250-day average, preliminary Reuters data
showed.
    Tuesday's losses reversed the previous session's climb to a
one-month high, when a 1 percent loss in U.S. equities triggered
safe-haven buying.
    In the three sessions before Tuesday, gold had gained more
than 3 percent, helped by Friday's U.S. nonfarm payrolls data.
The data showed disappointing jobs growth and prompted
speculation the U.S. Federal Reserve would proceed cautiously in
scaling back its stimulus program.
    The big drop in gold prices last year ended a 12-year bull
run. 
    But a slow start in some stock markets this year has boosted
gold prices, usually seen as a hedge against rising prices and
as an alternative investment to equities.
    
    PHYSICAL DEMAND
    In China, the biggest physical market for gold, demand has
picked up since the beginning of the month in the buildup to the
Lunar New Year, when the metal is bought for good fortune and
given as gifts. 
    The U.S. Mint said it sold 3,180,500 ounces of 2014 American
Eagle silver investment coins on Monday, the first day of sale
for such coins, representing nearly 90 percent of the Mint's
weekly allocation limit of 3,575,000 ounces. 
     Silver dropped 1.1 percent to $20.12 an ounce.
Platinum was down 1.2 percent to $1,422.70 an ounce,
while palladium eased 0.4 percent at $734.22 an ounce.
    
 3:05 PM EST     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold FEB   1245.40  -5.70  -0.5  1241.10 1254.90  130,473
 US Silver MAR  20.282 -0.103  -0.5   20.125  20.670   45,450
 US Plat APR   1433.80 -10.10  -0.7  1426.40 1447.50    8,351
 US Pall MAR    738.90  -1.10  -0.1   735.05  742.50    2,196
                                                               
 Gold          1242.66 -10.40  -0.8  1242.48 1255.00         
 Silver         20.120 -0.230  -1.1   20.160  20.580
 Platinum      1422.70 -17.29  -1.2  1427.75 1443.75
 Palladium      734.22  -2.78  -0.4   736.80  739.25
                                                               
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        163,128   128,857   187,159     17.98   -0.09
 US Silver       52,094    37,065    57,400      25.4    0.50
 US Platinum      8,964    14,039    12,790     16.64    0.19
 US Palladium     2,301     3,206     5,850     17.34   -0.15
                                                               
 
 (Additional reporting by A. Ananthalakshmi in Singapore;
Editing by Pravin Char, Keiron Henderson, Nick Zieminski and
Peter Galloway)
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