* 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
By Frank Tang and Clara Denina
NEW YORK/LONDON, Jan 14 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
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
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
Tuesday's losses reversed the previous session's climb to a
one-month high, when a 1 percent loss in U.S. equities triggered
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
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.
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