* French, German economies both shrank late 2012
* Global gold demand down 4 pct last year at 4,405 T-WGC
* Coming up: U.S. New York State manufacturing index
(Recasts, adds market details, updates prices)
By Frank Tang
NEW YORK, Feb 14 Gold fell to a six-week low on
Thursday as renewed worries about the euro zone economy weakened
bullion's appeal as a hedge against possible inflation, and
after an industry report stirred fears about demand for the
Gold fell around 0.5 percent, down for a second day, after
data indicated the euro zone slipped deeper than expected into
recession in the last three months of 2012 after its largest
economies, Germany and France, shrank late last year.
A report by trade group World Gold Council showing gold
demand fell for the first time last year since 2009 also hurt
bullion investor sentiment.
Bullion, used by investors as a hedge against money printing
by central banks, has come under pressure on signs of recovering
U.S. jobs and housing markets.
"The correlation across the asset classes have been breaking
down as of late. There are lots of asset rotation and chatter
about currency wars, so gold is a bit of a side show right now,"
said Axel Merk, chief investment officer of Merk Funds which
manages $630 million in mutual fund assets.
Gold dropped 0.3 percent to $1,636.66 an ounce by
3:49 p.m. EST (2049 GMT). It sank as low as $1,632.34, its
lowest since Jan. 4.
Analysts said technical selling could further pressure the
metal, which was hovering just $10 above $1,625.79 an ounce, a
U.S. COMEX gold futures for April delivery settled
down $9.60 at $1,635.50 an ounce, with trading volume in line to
finish near its 250-day average, preliminary Reuters data
Thursday's U.S. data showing falling initial jobless claims
also offered hope the labor market recovery may have picked up,
which further diminished gold's appeal as a safe haven.
Global gold demand fell last year for the first time in
three years, down 4 percent to 4,405 tonnes, as jewellery buying
abated in the key Indian and Chinese markets and U.S. and
European coin and bar investment dropped, the World Gold Council
said in a report.
Silver fell 0.7 percent to $30.52 an ounce, after it
fell below technical support at its 200-day average.
FOCUS ON G20
The next focus for the market is a two-meeting of G20
finance and central bank officials, beginning Thursday, for
clues about global growth and also their views on currencies.
Easy monetary policies in advanced economies have sparked
fears of dangerous currency devaluations, or the so called
"currency wars" in which countries compete to lower their
exchange rates in a bid to boost their balance of payments.
Among platinum group metals, platinum was down 0.6
percent to $1,707.74, while palladium eased 0.3 percent
to $763.22, having risen to a 17-month high at $775 in the
3:49 PM EST LAST/ NET PCT LOW HIGH CURRENT
SETTLE CHNG CHNG VOL
US Gold APR 1635.50 -9.60 -0.6 1632.80 1650.00 156,622
US Silver MAR 30.353 -0.516 -1.7 30.210 31.060 46,269
US Plat APR 1710.90 -18.80 -1.1 1709.40 1735.00 7,361
US Pall MAR 764.05 -8.00 -1.0 762.60 772.50 3,669
Gold 1636.66 -5.70 -0.3 1633.35 1649.66
Silver 30.520 -0.210 -0.7 30.250 31.060
Platinum 1707.74 -10.25 -0.6 1712.00 1730.75
Palladium 763.22 -2.00 -0.3 759.00 769.72
TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG
US Gold 172,146 186,181 172,646 14 0.02
US Silver 54,601 48,429 52,014 20.58 -0.73
US Platinum 7,506 15,954 11,081 17.26 0.06
US Palladium 4,494 5,184 4,696
(Additional reporting by Clara Denina in London; Editing by
Marguerita Choy and David Gregorio)