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PRECIOUS-Gold drops near 6-month low on economic optimism
February 19, 2013 / 11:56 AM / 5 years ago

PRECIOUS-Gold drops near 6-month low on economic optimism

* Price just above $1,600/ounce as investors focus on
    * With mergers heating up, S&P rises to 5-year high
    * Fading currency concerns add to flight from gold
    * Coming up: FOMC minutes, US housing starts on Wednesday

 (Adds market details, changes byline, updates prices)
    By Frank Tang
    NEW YORK, Feb 19 (Reuters) - Gold fell near a six-month low
on Tuesday, holding just above $1,600 an ounce, as an equities
rally and signs of an improving global economic outlook dented
bullion's safe-haven appeal. 
    The metal fell 0.5 percent as investors were drawn to
riskier assets as the S&P 500 climbed to a five-year high
with a string of recent merger activity suggesting stocks could
offer even more value. 
    Technical weakness also sent precious metals lower across
the board. Silver fell around 2 percent to a six-month low.
    Fading currency risks about a chaotic break-up of the euro
zone and recent data showing continued economic recovery around
the world have lessened the need for bullion among investors,
analysts said. 
    "You are seeing gold become an asset that investors no
longer need to jump in on because the fact that these currencies
are not going any time soon. So, the currency hedge is reduced
markedly," said Adam Sarhan, chief executive of Sarhan Capital. 
    Spot gold fell 0.3 percent to $1,604.46 an ounce by
4:16 p.m. EST (2116 GMT), having earlier hit a low of $1,600.34,
near a six-month low of $1,598.04 hit on Friday.
    U.S. gold futures for April delivery settled down
$5.30 at $1,604.20, with trading volume about 30 percent above
its 250-day average, preliminary Reuters data showed.
Volume was higher than usual as it included Monday's electronic
trading as U.S. markets were shut for the President's Day
    Last week's 3.5 percent drop - the largest weekly fall since
May 2012 - made gold vulnerable to further losses in the short
term, traders said.
    U.S. regulatory selling showing bullion selling by Notable
institutional investors, including George Soros, Julian
Robertson and Allianz's PIMCO in the fourth quarter of 2012 also
weighed down on sentiment. 
    Investors will scour the minutes from the latest policy
meeting of the U.S. Federal Reserve due on Wednesday for hints
on the central bank's attitude to monetary stimulus, which has
been a key driver behind gold's rally over the past two years.
    Silver, which tends to be more volatile than gold,
fell 1.5 percent to $29.38 an ounce.
    Platinum prices fell after platinum producer Anglo American
Platinum said operations at its South African mines
should resume on Wednesday. 
    Spot platinum fell 0.1 percent to $1,690.50 an ounce,
while palladium edged up 0.1 percent to $761.50 an ounce.
    Year to date, platinum is outperforming gold after Amplats
said it planned to restructure its South African mines and to
cut 14,000 jobs. 
    Broker UBS cut its one-month platinum forecast to $1,650
from $1,720, anticipating potential downside risks to sentiment
surrounding the broad U.S. automatic spending cuts due in March.
 4:16 PM EST     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold APR   1604.20  -5.30  -0.3  1600.20 1618.80  201,305
 US Silver MAR  29.422 -0.427  -1.4   29.175  30.150   71,684
 US Plat APR   1697.50  19.80   1.2  1676.50 1704.70   15,434
 US Pall MAR    764.15  11.00   1.5   750.70  767.35    5,927
 Gold          1604.46  -5.09  -0.3  1600.34 1614.95         
 Silver         29.380 -0.460  -1.5   29.250  30.130
 Platinum      1690.50  -1.50  -0.1  1681.50 1699.24
 Palladium      761.50   0.50   0.1   761.00  765.00
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        220,698   183,779   172,750     15.34    0.35
 US Silver       92,608    48,318    52,078     21.65   -0.19
 US Platinum     15,817    14,714    11,126     17.43    0.08
 US Palladium     7,798     5,692     4,796                  
 (Additional reporting by Clara Denina in London; editing by
Andrew Hay and Marguerita Choy)

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