* Funds fear Fed stimulus linked to jobs could end soon
* Post-Fed rally short-lived amid 'fiscal cliff' concerns
* Silver down 3 pct after break below 50-day moving average
* Coming up: U.S. consumer prices Thursday
(Recasts, adds market details, updates prices)
By Frank Tang
NEW YORK, Dec 13 Gold fell 1 percent on Thursday
as fears the Federal Reserve might withdraw its economic
stimulus if the job market improved dramatically prompted funds
to reduce their bullish bets.
The metal fell below $1,700 on Thursday for the first time
this week on economic worries about the U.S. "fiscal cliff,"
overshadowing its safe-haven appeal. Liquidation by large
institutional investors in gold futures on fears of tax hikes in
the new year also pressured prices, traders said.
Silver dropped 3 percent for its biggest one-day decline in
Gold's drop came a day after the U.S. central bank adopted
numerical thresholds for its monetary policy. It said it would
keep interest rates near zero until the U.S. unemployment rate
fell to 6.5 percent.
Analysts said the move stirred fears that the U.S. central
bank could put an end to its loose monetary policy which has
boosted the metal's inflation-hedge appeal.
"With the economy showing some signs of recovery, we may see
a 6.5 percent unemployment rate sooner than previously
anticipated, so longer-dated funds that are heavily invested in
metals are looking to reduce their gold positions," said Phillip
Streible, senior commodities broker at futures brokerage R.J.
The unemployment rate fell to a nearly four-year low of 7.7
percent in November, but most economists do not expect the rate
to fall to 6.5 percent anytime soon.
Spot gold was down 1 percent at $1,694.21 an ounce by
3:09 p.m. EST (2009 GMT) after falling to a one-week low of
U.S. COMEX gold futures for February delivery settled
down $21.10 at $1,696.80, with volume about 15 percent below its
30-day average, preliminary Reuters data showed.
Silver, which has outperformed gold year to date, was
down 3.1 percent at $32.40 an ounce. Technical selling also
weighed on silver as loss accelerated after prices slid below
its 50-day moving average.
DEFLATION WORRIES, FISCAL CLIFF WEIGH
Lingering recession fears related to $600 billion of tax
increases and spending cuts set to take effect on Jan. 1, 2013
triggered gold selling, traders said.
"The larger holders of futures are concerned with the
December 31 mark due to tax consequences, and they tend to even
out (this year) and take new positions next year," said George
Gero, vice president of RBC Capital Markets.
Open interest, a gauge of market activity, has fallen about
12 percent from a one-year high reached on Nov. 23, CME data
Among platinum group metals, platinum fell 1.2
percent to $1,613 an ounce, while palladium eased 0.6
percent to $688.50 an ounce.
3:09 PM EST LAST/ NET PCT LOW HIGH CURRENT
SETTLE CHNG CHNG VOL
US Gold FEB 1696.80 -21.10 -1.2 1690.70 1712.80 152,998
US Silver MAR 32.355 -1.427 -4.2 32.280 33.520 55,876
US Plat JAN 1612.80 -33.60 -2.0 1603.20 1633.00 14,156
US Pall MAR 691.65 -9.50 -1.4 680.25 696.25 5,336
Gold 1694.21 -17.34 -1.0 1688.94 1711.50
Silver 32.400 -1.040 -3.1 32.260 33.450
Platinum 1613.00 -19.75 -1.2 1606.75 1634.50
Palladium 688.50 -4.00 -0.6 682.50 693.50
TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG
US Gold 162,367 188,408 173,412 13.46 -0.39
US Silver 62,675 59,974 52,452 21.3 -0.54
US Platinum 16,836 9,024 8,904 17.25 -0.08
US Palladium 5,385 6,205 4,772
(Additional reporting by David Brough in London and Rujun Shen
in Singapore; editing by John Wallace and Sofina Mirza-Reid)