PRECIOUS-Gold falls about 1 pct on Fed tapering speculation

Tue Jan 21, 2014 2:25pm EST

Related Topics

* Report saying Fed to continue tapering bond purchases
weighs
    * Chinese gold demand eases; bullion imports seen falling
    * Markets monitor holding changes in SPDR Gold Trust
    * Coming up: U.S. jobless claims, existing home sales Thurs


    By Frank Tang and Clara Denina 
    NEW YORK/LONDON, Jan 21 (Reuters) - Gold fell about 1
percent on Tuesday, its biggest one-day drop so far in 2014, hit
by widespread speculation that the U.S. Federal Reserve might
announce a further cut in its bond-buying program at a meeting
next week.
    Traders said signs of a better U.S. economy and expected Fed
stimulus trimming will weigh on gold's investment appeal as a
hedge against inflation.
    "I am confident that the Fed is going to continue its
tapering approach. There's been sustained improvement in the
global economic recovery, and that should continue to dampen
safe-haven asset demand," said Phillip Streible, senior
commodities broker at brokerage RJ O'Brien. 
    A report in the Wall Street Journal on Monday said the Fed
is on track to trim its bond-buying program for the second time
in six weeks as a lackluster December jobs report failed to
diminish the Fed's expectations for solid U.S. economic growth
this year. The U.S. central bank's next meeting is scheduled for
Jan. 28-29.            
    Spot gold was down 0.9 percent at $1,241.76 per ounce
by 2:11 p.m. EST (1911 GMT), having fallen as much as 1.4
percent to a one-week low of $1,235.68. 
    A lack of major U.S. economic indicators on Tuesday prompted
some gold investors to take profits after the metal posted its
fourth consecutive weekly gain last week.
    U.S. gold futures for February delivery settled down
$10.10 at $1,241.80 an ounce.
    Trading volume was in line with its 250-day average,
preliminary Reuters data showed. U.S. gold traders returned to
their desks after the market was shut on Monday for the Martin
Luther King Jr. Day holiday.

    CHINA DEMAND FADES
    Gold purchases in China, the world's biggest buyer of the
metal, have slowed from last week's levels as gold prices have
gained for four straight weeks.
    Analysts say Chinese gold imports, the lone bright spot in
an otherwise disastrous year for bullion in 2013, look set to
fall from last year's record levels. 
    Traders continue to monitor gold investment interest after
data showed that holdings in SPDR Gold Trust, the world's
largest gold-backed exchange-traded fund, posted the first
increase in a month. 
    Among platinum group metals, platinum fell 1 percent
to $1,447.99 an ounce, while palladium edged down 0.1
percent at $745 an ounce.
    Analysts said platinum group metal prices were underpinned
after the chief executives of the world's top three platinum
producers said wage hikes being sought by the AMCU union, which
plans a strike against their South African operations this week,
were "unaffordable and unrealistic." 
    Silver was down 2.2 percent at $19.82 an ounce, also
its biggest one-day drop this year. 

 2:11 PM EST     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold FEB   1241.80 -10.10  -0.8  1235.10 1262.00  156,546
 US Silver MAR  19.870 -0.434  -2.1   19.655  20.435   43,916
 US Plat APR   1453.50  -0.60   0.0  1437.00 1473.00   17,286
 US Pall MAR    748.05  -0.50  -0.1   741.00  752.25    4,071
                                                               
 Gold          1241.76 -11.43  -0.9  1236.30 1255.85         
 Silver         19.820 -0.440  -2.2   19.700  20.320
 Platinum      1447.99 -13.91  -1.0  1440.75 1466.50
 Palladium      745.00  -0.40  -0.1   743.70  747.25
                                                               
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        184,418   134,427   187,375     16.84    0.32
 US Silver       47,741    38,391    57,307     24.17   -0.46
 US Platinum     17,336    12,873    12,662     14.45    0.09
 US Palladium     4,139     2,967     5,840     16.33   -0.55
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