January 15, 2014 / 10:47 AM / in 4 years

PRECIOUS-Gold down for second day as dollar rises, equities gain

* Strong U.S. producer prices, manufacturing data weigh
    * US economy grew at moderate pace late last year -Fed
    * China grants gold import licenses to ANZ, HSBC
    * Coming up: U.S. consumer price index Thursday

 (New throughout, updates prices and market activity, adds
details from Fed's Beige Book)
    By Frank Tang and Clara Denina 
    NEW YORK/LONDON, Jan 15 (Reuters) - Gold fell for a second
session on Wednesday as the dollar rallied after data showed
U.S. producer prices rose sharply in December even though there
were few signs of sustained price pressures.
    The Labor Department said its seasonally adjusted producer
price index rose 0.4 percent in December, the biggest rise in
six months. 
    The Federal Reserve's Beige Book report also showed the U.S.
economy kept growing at a moderate pace from late November
through the end of 2013, with some regions expecting a pick-up
in growth. 
    Analysts said gold's near 3 percent gain year-to-date was
supported by speculation that the Federal Reserve may be more
cautious in tapering its monetary stimulus after last Friday's
disappointing nonfarm payrolls report. 
    "But we suspect that the complex will find it hard to
sustain these gains over the course of the next few weeks,
especially as the next Fed meeting draws near later this month,"
said Edward Meir, metals analyst at brokerage INTL FCStone. 
    The next meeting of the Federal Open Market Committee is on
Jan. 28-29.
    Spot gold dropped 0.4 percent to $1,240.15 an ounce
by 3:37 p.m. EST (2037 GMT). 
    U.S. COMEX gold futures for February delivery settled
down $7.10 at $1,238.30 an ounce, with trading volume about 45
percent below its 250-day average, preliminary Reuters data
showed.
    Bullion was under pressure as the dollar index gained around
0.5 percent, up for a second day on strong U.S. regional
manufacturing and the wholesale price data. 
    A second day of gains in U.S. equities, led by strong
earnings from Bank of America Corp, also reduced gold's
safe-haven appeal. The S&P 500 index climbed about 0.5 percent.
 
    As a gauge of investor sentiment, holdings in the world's
largest gold-backed exchange-traded fund, SPDR Gold Trust,
fell 3.56 tonnes to a five-year low of 789.56 tonnes on Tuesday.
 
    In physical-market news, China has granted licences to
import gold to ANZ and HSBC, the first two
foreign banks, sources told Reuters, as efforts to open the
world's biggest physical bullion market gather pace.
 
    Among other precious metals, silver fell 0.3 percent
to $20.15 an ounce. Platinum dropped 0.2 percent to
$1,423.75 an ounce, while palladium was up 0.8 percent at
$739.50 an ounce.
    Platium group metals failed to react to news that South
Africa's Association of Mineworkers and Construction Union
(AMCU) said it would not hesitate to call a strike in the
platinum industry over wage negotiations. 
 3:37 PM EST     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold FEB   1238.30  -7.10  -0.6  1233.50 1244.60   96,662
 US Silver MAR  20.134 -0.148  -0.7   19.905  20.270   27,985
 US Plat APR   1428.60  -5.20  -0.4  1415.10 1432.90    8,258
 US Pall MAR    744.00   5.10   0.7   733.95  748.10    3,652
                                                              
 Gold          1240.15  -4.56  -0.4  1234.60 1245.00         
 Silver         20.150 -0.060  -0.3   19.950  20.250
 Platinum      1423.75  -2.50  -0.2  1417.25 1428.50
 Palladium      739.50   6.10   0.8   735.60  744.75
                                                              
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        108,500   132,896   187,344     18.09    0.11
 US Silver       29,889    38,394    57,353     24.85   -0.55
 US Platinum      8,322    13,443    12,746     16.95    0.31
 US Palladium     3,737     3,088     5,849     16.85   -0.49
                                                              
 
 (Additional reporting by A. Ananthalakshmi in Singapore;
Editing by William Hardy and Elaine Hardcastle)

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