March 28, 2013 / 12:05 PM / 5 years ago

PRECIOUS-Gold falls, down for quarter as safe-haven bid fades

* Cypriot banks reopened with no chaos as some had feared
    * S&P 500 rises above record closing high, dents safe havens
    * Encouraging U.S. economic growth data suggest recovery on
track
    * Coming up: U.S. personal income data Friday

 (New throughout, updates prices and market activity, new
byline, changes dateline, pvs LONDON)
    By Frank Tang
    NEW YORK, March 28 (Reuters) - Gold fell on Thursday and
closed the first three months of 2013 with a quarterly decline
of nearly 5 percent as fears about Europe waned, Wall Street
surged and strong U.S. economic data cut demand for a safe
haven.
    Gold slipped after U.S. GDP data showed the economy expanded
at an annual rate of 0.4 percent for the fourth quarter, more
than the government had previously estimated. Initial jobless
claims rose last week but not enough to suggest the labor market
recovery was losing steam. 
    Strong U.S. employment and housing market reports in the
first quarter prompted some Federal Reserve officials to suggest
the U.S. central bank should halt its stimulus program earlier
than expected, weighing on demand for gold as an inflation
hedge.
    For the month of March, gold rose 1 percent after five
months of declines. The boost came from renewed euro zone fears
after Cyprus was forced to accept a tough international bailout
to avoid bankruptcy earlier this week.
    "Gold has failed to maintain its rally since the Cyprus
crisis started because the credit deterioration that could have
resulted has not expanded yet at this point," said Ed Lashinski,
Director of Global Strategy and Execution for RBC Capital
Markets' futures group.
    Spot gold was down 0.6 percent to $1,595.70 an ounce
by 3:32 PM EST (1932 GMT). Gold prices were down 4.7 percent for
the first quarter for a second consecutive quarterly loss. 
    U.S. gold futures for June delivery settled down
$11.50 at $1,595.70 an ounce, with trading volume about 35
percent below its 250-day average, preliminary Reuters data
showed.
    In euro terms, gold posted a monthly gain of
around three percent, its best monthly performance since July. 
    Gold fell as Cypriots queued calmly on Thursday to withdraw
limited amounts of cash, as the island's banks reopened for the
first time in two weeks with no sign of a run on deposits as
many had feared. 
    Gold hit a one-month high of $1,616.36 last week on concerns
the $10 billion euro rescue deal for Cyprus, which will leave
big depositors and private bondholders with huge losses, could
become a template for future bank bailouts in the euro zone. 
    Lashinski called the Cyprus situation a potential "game
changer" for gold as the outlook in Europe's credit markets
remained uncertain.
    Euro zone debt fears had helped power gold to a record high
of above $1,920 an ounce in September 2011.
    
    S&P SET FOR RECORD CLOSE    
    Safe-haven bids decreased as U.S. stocks edged higher as the
S&P 500 rose just above its record closing high set in
October 2007, a level that has acted as a significant resistance
point in recent weeks. 
    Reflecting the stalled momentum in investment demand,
holdings of SPDR Gold Trust, the world's largest
gold-backed exchange-traded fund, was set for its biggest
quarterly outflow since inception. 
    Liquidity should return next week, when an European Central
Bank policy meeting and U.S. non-farm payrolls could provide
trading cues for the gold market.
    In other precious metals, spot silver fell 0.9
percent to $28.38 an ounce. Platinum fell 0.8 percent to
$1,566, while palladium rose 0.4 percent to $767.72.
 3:32 PM EST     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold JUN   1595.70 -11.50  -0.7  1594.30 1608.30  107,464
 US Silver MAY  28.323 -0.289  -1.0   28.170  28.810   33,461
 US Plat JUL   1574.60  -8.90  -0.6  1561.90 1589.90    8,656
 US Pall JUN    768.25  -0.05   0.0   760.95  775.45    4,806
                                                               
 Gold          1595.70  -9.09  -0.6  1594.55 1607.31         
 Silver         28.380 -0.250  -0.9   28.230  28.820
 Platinum      1566.00 -12.96  -0.8  1563.50 1585.00
 Palladium      767.72   2.72   0.4   764.00  773.00
                                                               
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        116,991   207,168   172,537     12.58   -0.42
 US Silver       39,920    58,014    52,042     18.77    0.16
 US Platinum      9,273    16,328    11,784     14.08   -0.89
 US Palladium     4,831     7,636     5,194                  
                                                               
 
 (Additional reporting by Clara Denina in London; Editing by
David Gregorio)

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