* End-of-week liquidation sends gold down almost 1.5 pct
* Euro under pressure from worries over Spain
* CME cuts margins for silver, palladium
By Josephine Mason
NEW YORK, April 13 Gold prices fell almost 1.5
percent o n F riday as a stronger dollar sparked a wave of
end-of-week selling amid mounting fears about the euro-zone debt
crisis and after Chinese economic growth data disappointed
Bullion ended off session lows to finish down 1.2 percent.
For the week, it finished up almost 1 percent, its largest
weekly rise since the end of February.
But a late afternoon sell-off saw gold prices tumble $10 in
a matter of minutes as concerns about the deepening euro-zone
debt crisis fuelled end-of-week liquidation. Traders suggested
banks may be looking to reduce risk and bolster capital flows.
Spot gold was down 1.22 percent at $1,654.54 an ounce
at 2.55 p.m. (1855 GMT), heading for its biggest daily fall
since April 4.
U.S. gold futures for June delivery settled down 1.21
percent at $1,660.
Once spot gold broke through $1,657 per oz, there was little
technical support, with the next resistance seen around $1,610
per oz. The 300-day moving average is at $1,624 per oz.
Gold came under pressure as the dollar rebounded on worries
about Spanish banks and after Chinese growth data disappointed
China reported that its economy in the first quarter grew at
its weakest pace in nearly three years, easing to an annual
growth rate of 8.1 percent from 8.9 percent in the previous
A stronger dollar tends to weigh on gold, as it makes
dollar-priced commodities more expensive for other currency
holders, and curbs the metal's appeal as an alternative asset.
U.S equities fell as concerns about the pace of global
growth sparked an end-of-week selloff in financial shares.
Traders said selling pressure on gold remained heavy. Frank
McGhee, head precious metals trader with Integrated Brokerage
Services LLC in Chicago, said $1,610-1,620 "is really the last
gasp, but I'm not sure it'll hold up. There's nothing
technically between here and $1,550."
A fall to $1,550 would wipe out the year's gains to date.
"Especially in the United States, the investment climate is
very neutral towards gold at this stage. People really need to
see a policy catalyst before they come back aggressively,"
Standard Bank analyst Walter de Wet said.
"On the physical side, from the end of this month there is
really no seasonal demand coming until August," he added. "It is
going to be difficult to break much higher if we don't have this
physical buying supporting any investment demand coming through
for the next two or three months."
STRUGGLE FOR MOMENTUM
The latest Reuters poll showed analysts turning more
cautious toward gold. While analysts still expect the precious
metal to rally through this year and into 2013, just one of 33
polled expected it to average more than $2,000 an ounce this
year, against five of 45 in a January poll.
"The last six months has seen an increase in correlation
between gold and other risk assets," Schroders Private Banking
head of asset allocation Robert Farago said. He said that
perception makes gold less attractive as a portfolio
"I am not convinced that a deflationary environment will
prove favourable in the short term," he added. "This would
produce a liquidity squeeze and gold may well prove a source of
funds since almost all investors are sitting on profits."
Physical buying in Asia's bullion market slowed to a trickle
on Friday, as higher prices pushed traders to the sidelines, but
a gold-buying festival in India in late April is likely to help
bring in some demand from the world's top consumer of the metal.
Silver was down 2.69 percent at 31.45 an ounce, spot
platinum was down 0.96 percent at $1,582.74 an ounce and
spot palladium was down 1.12 percent at $641.47 an ounce.
CME Group, the biggest operator of U.S. futures exchanges,
said it will cut margins for COMEX silver futures for the second
time since February in an attempt to boost liquidity after a
narrow price range tempered trading interest.
(Editing by David Gregorio)