April 3, 2013 / 3:46 AM / 5 years ago

PRECIOUS-Gold drops to near 4-week low on U.S. economic optimism

* Spot gold to drop to $1,562 -technicals 
    * Coming up: U.S. ISM non-manufacturing index at 1400 GMT

 (Updates prices, adds physical market)
    By Lewa Pardomuan
    SINGAPORE, April 3 (Reuters) - Gold fell for a second
straight day on Wednesday to hit its lowest in four weeks, with
investors shifting their money into risky assets for better
returns on renewed optimism over the U.S. economy.
     Bullion has slipped more than 3 percent since hitting a
1-month high in March as fears about the debt crisis in Europe
subsided and Wall Street rallied on strong U.S. economic data,
curbing safe-haven demand.
     Gold dropped as much as 0.8 percent to $1,563.06 an
ounce on Wednesday, its weakest since March 8, after initially
hitting an intraday day high of $1,576.91 on bargain hunting. By
0628 GMT, gold was at $1,565.16 an ounce, down $10.08.   
     Physical dealers noted buying from jewellers in Indonesia,
but other consumers were expected to wait for prices to slip
    Weaker gold prices dragged down other precious metals, with
silver falling to its lowest since July, attracting
physical buying from Thailand.     
     "Actually, all depends on the flavour of the day. Now, I
suppose sentiment has shifted. Perhaps, with the U.S. economy on
a stronger footing, it's better to be in equities," said CIMB
regional economist Song Seng Wun.
     "Perhaps one should take a bit more risk. It is more of a
case of people taking money off the table from gold because they
are not quite sure where the technical downside is for gold at
this point." 
     U.S. data on Tuesday showed February factory orders rose 3
percent, slightly above expectations. 
     U.S. gold for June delivery fell $10.70 an ounce to
     Premiums for gold bars were unchanged in Singapore at $1.20
an ounce to spot London prices. 
    "People did buy a bit yesterday when prices started to come
off. There's light buying today, but we don't see a rush in
purchases," said a dealer in Singapore. "Silver has come down so
much, and we see a pickup in demand." 
    Japan's Nikkei average jumped 3 percent on Wednesday, its
biggest one-day rise in two months, while the euro was subdued
ahead of policy decisions by the European Central Bank.
    Investors were awaiting the release of the U.S. nonfarm
payrolls report on Friday, which may confirm market views the
Federal Reserve wants to maintain its extremely accommodative
monetary policy. 
    Two Fed officials voiced cautious optimism on Tuesday the
U.S. economy was on a lasting upswing, but they offered
differing views on what that outlook ought to mean for the
central bank's controversial programme of buying bonds to
stimulate growth. 
    Fears that central banks' money-printing to buy assets will
stoke inflation have been a key driver in boosting gold, which
rallied to an 11-month high in October last year after the Fed
announced its third round of aggressive economic stimulus.
    "There is a lack of interest in gold right now and everybody
seems to be sitting on the sidelines. Stocks are still looking
more attractive for investors than gold and that's where money
continues to flow into," said Yuichi Ikemizu, branch manager for
Standard Bank in Tokyo. 
    "The $1,550 level is the low for the current ranges and I
doubt that prices will break below that level." 
    Gold contracts on the Tokyo Commodity Exchange <0#JAU:>
extended losses as Japanese investors shrugged off tensions
between North and South Korea. 
  Precious metals prices 0628 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1565.16  -10.08   -0.64     -6.53
  Spot Silver        26.90   -0.30   -1.10    -11.16
  Spot Platinum    1557.24  -12.26   -0.78      1.45
  Spot Palladium    760.72   -3.28   -0.43      9.93
  COMEX GOLD JUN3  1565.20  -10.70   -0.68     -6.60        27620
  COMEX SILVER MAY3  26.87   -0.38   -1.41    -11.13         8888
  Euro/Dollar       1.2790
  Dollar/Yen         93.53
  COMEX gold and silver contracts show the most active months

 (Additional reporting by Chikako Mogi in TOKYO; Editing by
Muralikumar Anantharaman and Joseph Radford)

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