* Gold, silver prices hit lowest since August 2010
* SPDR, biggest gold ETF, has biggest outflow in 2 months
* Gold down 23 pct in Q2, on track for record quarterly loss
* Coming up: U.S. PCE price index, personal income Thursday
(Adds comments, update prices)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, June 26 Gold tumbled 4 percent
on Wednesday, taking it near a three-year low as a rallying U.S.
equity markets further cut into demand for bullion as a hedge
against economic uncertainty.
Silver dropped 5 percent and platinum group metals also
Bullion tumbled again even after the U.S. government slashed
its estimate for first-quarter economic growth, which made
investors less worried that the Federal Reserve would move soon
to end its U.S. economic stimulus.
Bullion has slid around $125 an ounce in four sessions since
the Fed signalled it plans to wind down the era of easy money.
With two trading days left in the second quarter, gold was down
23 percent for the period, on course for its biggest quarterly
decline since Reuters began tracking gold prices in 1968.
"We bought gold for two reasons: because we were worried
about the inflationary impact of policy and because we thought
the financial system was going to fall apart," said Sean
Corrigan, chief investment strategist at Diapason Commodities
"Although it may be completely the wrong judgement, the
market has decided that none of those at the moment is a
concern," Corrigan said.
Spot gold slumped to its lowest since August 2010 at
$1,223.54 an ounce. It was last down 4 percent at $1,225.91 an
ounce by 3:08 p.m. EDT (1908 GMT).
U.S. gold futures for August delivery settled down
$45.30 to $1,229.80. Trading volume exceeded 315,000 lots,
sharply above its 30-day average of 211,000, preliminary Reuters
Gold, which has lost more than a quarter of its value this
year, accelerated losses during Wednesday's session as the S&P
500 rose. The benchmark U.S. stock index was up more than
1 percent in late trade.
"People want risk-on and gold is therefore seen as a source
of cash and not as a safe haven, because that's not needed,"
said Simon Weeks, head of precious metals at the Bank of Nova
On Tuesday, the world's largest gold-backed exchange-traded
fund posted its biggest outflow in two months. Holdings in SPDR
Gold Trust fell 16.23 tonnes, 1.65 percent from the day
before, to 969.50 tonnes, their lowest since February 2009.
On charts, several technical analyses including the relative
strength index suggested gold is oversold, said Carlos
Perez-Santalla at brokerage Marex Spectron. "A pop could be
expected if another test of the downside fails," he said.
Silver fell to its lowest since August 2010 at $18.39 an
ounce. Spot prices were later down 5.2 percent at $18.57
ETF OUTFLOW, ASIA DEMAND EYED
The world's No. 1 gold ETF the SPDR Gold Shares
reported the biggest one-day drop in its holdings in more than
two months at 16.23 tonnes on Tuesday. That brought the fund's
total outflow for the year to 381 tonnes.
Further weighing on gold, demand in the No. 1 consumer India
is likely to fall this quarter as the government moves to curb
Worries about a liquidity crunch in China also pressured
physical gold demand, analysts said.
Among platinum group metals, platinum was down 3.8
percent at 1,298.99 an ounce, while palladium slid 4.9
percent to $629.97 an ounce.
3:08 PM EDT LAST/ NET PCT LOW HIGH CURRENT
SETTLE CHNG CHNG VOL
US Gold AUG 1229.80 -45.30 -3.6 1221.00 1277.50 285,723
US Silver JUL 18.587 -0.939 -4.8 18.360 19.580 83,798
US Plat JUL 1303.70 -46.80 -3.5 1299.30 1351.10 14,076
US Pall SEP 633.25 -35.55 -5.3 630.80 667.50 5,987
Gold 1225.91 -50.83 -4.0 1222.55 1277.79
Silver 18.570 -1.010 -5.2 18.460 19.630
Platinum 1298.99 -51.01 -3.8 1303.50 1349.25
Palladium 629.97 -32.77 -4.9 634.00 664.24
TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG
US Gold 315,083 211,046 182,075 26.69 2.30
US Silver 145,180 62,340 57,447 34.03 -3.63
US Platinum 30,992 15,627 11,806 25.67 -1.93
US Palladium 6,092 6,586 5,563
(Additional reporting by Veronica Brown in London; Editing by
Marguerita Choy and David Gregorio)