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PRECIOUS-Gold drops on technical weakness, dollar; Fed eyed
January 22, 2014 / 11:46 AM / 4 years ago

PRECIOUS-Gold drops on technical weakness, dollar; Fed eyed

* Technical selling weighs after failure to break $1,260/oz
    * Speculation on more Fed stimulus cuts
    * Chinese physical gold demand slows
    * Coming up: U.S. weekly jobless claims Thursday

 (Updates prices)
    By Frank Tang and Veronica Brown
    NEW YORK/LONDON, Jan 22 (Reuters) - Gold prices fell on
Wednesday, extending the previous session's 1 percent pullback,
due to technical weakness and strength in the dollar.
    Platinum prices climbed on supply worries as South Africa's
Impala Platinum shut its mine a day before a planned strike over
miners' wages. 
    Analysts said bullion's positive start to 2014 looked to be
fading due to the prospects of an improving U.S. economy and
expectations for further Federal Reserve stimulus reduction.
    Gold's repeated failure to break above key technical
resistance at $1,260 an ounce prompted investors to take
profits. On Tuesday, gold reversed early gains to end nearly 1
percent lower for its biggest one-day drop so far this year.
    "Having once again seen that the 'seller' at the
$1,250-1,255 level was formidable ... we have no choice but to
reduce our exposure a bit," said independent trader Dennis
Gartman.
    Spot gold fell 0.4 percent to $1,235.80 per ounce on
the day by 4:15 p.m. EST (2115 GMT).
    U.S. COMEX gold futures for February delivery settled down
$3.20 at $1,238.60 an ounce.
    Turnover was weaker than usual, with trading volume at about
half of its 250-day average, preliminary Reuters data showed.
    A stronger dollar also triggered profit-taking in the
precious metal. 
    Dealers and analysts said concerns about further trimming of
U.S. central bank stimulus, which weighed on prices last year,
were back on the agenda.
    The Federal Reserve holds its next policy meeting on Jan.
28-29 when markets think the U.S. central bank will announce a
second cut to its massive monthly bond purchases, which had
burnished gold's inflation-hedge appeal.
    In other market news, sources said banks involved in the
gold fix are reviewing the mechanics of its process to try to
ensure that the benchmark complies with upcoming regulations.
 
    
    CHINA PREMIUMS EASE
    Asia-based traders said prices could fall further as Chinese
physical purchases were also slowing after strong demand earlier
this year for the Lunar New Year holiday at the end of January.
    Platinum was up 0.3 percent at $1,452.74,
consolidating after hitting a three-month peak recently as
strikes were set to begin on Thursday at the South African mines
of top producers.
    Impala Platinum shut all its South African operations on
Wednesday, a day before the planned strike over wages across the
country's platinum belt by the hardline Association of
Mineworkers and Construction union (AMCU). 
    Silver fell 0.6 percent to $19.73 per ounce, while
palladium inched up 7 cents to $743.97. 
 4:15 PM EST     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold FEB   1238.60  -3.20  -0.3  1235.50 1243.50   78,591
 US Silver MAR  19.839 -0.031  -0.2   19.735  19.940   17,026
 US Plat APR   1462.40   8.90   0.6  1447.80 1465.90    8,192
 US Pall MAR    748.85   0.80   0.1   743.25  749.65    1,894
                                                              
 Gold          1235.80  -5.31  -0.4  1236.48 1243.70         
 Silver         19.730 -0.120  -0.6   19.780  19.930
 Platinum      1452.74   3.99   0.3  1450.25 1461.75
 Palladium      743.97   0.07   0.0   745.75  747.25
                                                              
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold         98,092   133,021   186,989     16.52   -0.43
 US Silver       18,193    37,981    57,249     25.85    1.68
 US Platinum      8,315    12,487    12,646     15.23    0.78
 US Palladium     1,995     2,902     5,847     16.61    0.28
                                                              
 
 (Additional reporting by A. Ananthalakshmi in Singapore;
Editing by Stephen Powell, Marguerita Choy and Jonathan Oatis)

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