* Bullion extends gains to third straight session
* Option trades suggest price volatilities to fall
* Gold seen down 15 pct at $1,050 by year end -Goldman
* Coming up: US retail sales Tuesday
(Adds option trader comment, Goldman note, updates market
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Jan 13 Gold rose to a one-month
high on Monday as fresh losses in U.S. equities triggered
safe-haven buying and extended the previous session's bullion
rally sparked by lackluster U.S. nonfarm payrolls data.
The metal posted its third consecutive daily rise and
accelerated gains as the S&P 500 equities index fell more
than 1 percent as investors awaited company earnings.
Analysts said gold's 4 percent gain year-to-date was
supported by a drop in equities early in 2014 following a record
run-up in stocks last year.
"There was some follow-through buying from Friday's job
report and rotation from equities to gold," said Frank McGhee,
head precious metals dealer at Chicago commodities brokerage
Alliance Financial LLC.
"At some point, gold's rally is going to fade" because of an
improving economic outlook, McGhee said.
Spot gold was up 0.5 percent to $1,252.84 an ounce by
2:56 p.m. EDT (1915 GMT), having earlier hit a one-month high at
On Friday, gold rallied 1.5 percent after disappointing U.S.
jobs data stirred speculation the Federal Reserve will take a
gradual approach to tapering its bond-buying stimulus this year.
U.S. COMEX gold futures for February delivery settled
up $4.20 an ounce at $1,251.10, the contract's highest close
since Dec. 11.
Trading volume was about 40 percent below its 250-day
average, preliminary Reuters data showed.
COMEX gold options floor trader Jonathan Jossen said that
large option traders were selling straddles to capture the
premiums as they expect gold prices to stay rangebound in the
Straddle is an option strategy involving buying one call
option and one put option with the same strike and same expiry
date. Its value tends to rise when volatilities are increasing.
Bullion largely shook off early losses stemming from the
U.S. investment bank Goldman Sachs' forecast of a year-end price
target of $1,050 for gold, putting the yellow metal on course
for a 15 percent loss from current levels.
In supply news, gold production in China rose 7 percent from
a year earlier to reach 392.141 tonnes in the first 11 months of
2013, data from the China Gold Association showed on Monday.
Among other precious metals, silver rose 1.2 percent
to $20.36 an ounce.
Platinum prices were underpinned by supply worries after
South Africa's Association of Mineworkers and Construction Union
(AMCU) said on Monday its workers had voted in favor of a strike
over wages at Impala Platinum (Implats), the world's
second-largest producer of the metal.
Platinum rose 0.3 percent to $1,438.24 an ounce and
palladium lost 0.2 percent to $737.22 an ounce.
2:56 PM EST LAST/ NET PCT LOW HIGH CURRENT
SETTLE CHNG CHNG VOL
US Gold FEB 1251.10 4.20 0.3 1243.00 1255.30 104,909
US Silver MAR 20.385 0.162 0.8 19.955 20.470 33,827
US Plat APR 1443.90 7.00 0.5 1433.00 1445.50 6,140
US Pall MAR 740.00 -6.05 -0.8 737.60 746.80 3,122
Gold 1252.84 6.14 0.5 1244.00 1254.50
Silver 20.360 0.250 1.2 19.970 20.430
Platinum 1438.24 4.74 0.3 1436.40 1440.49
Palladium 737.22 -1.78 -0.2 739.50 743.75
TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG
US Gold 131,784 126,829 186,935 18.16 -0.08
US Silver 36,203 36,179 57,343 24.9 -1.54
US Platinum 6,210 14,074 12,874 16.45 -1.44
US Palladium 3,183 3,164 5,854 17.49 -0.81
(Additional reporting by Clara Denina in London; Editing by
Dale Hudson, Keiron Henderson, Andrew Hay and Meredith Mazzilli)