September 9, 2014 / 10:36 AM / 5 years ago

PRECIOUS-Gold drops below $1,250/oz; platinum hits 7-month low

* Gold hits three-month low on Fed rate hike fears
    * Dollar index at 14-month high, pressures commodities
    * Gold futures volume heavy after breaching $1,250
    * Coming up: U.S. wholesale inventories Wednesday

 (Updates market activities)
    By Frank Tang and Clara Denina 
    NEW YORK/LONDON, Sept 9 (Reuters) - Gold prices fell below
$1,250 an ounce on Tuesday, as technical selling and speculation
that the U.S. Federal Reserve and other central banks would hike
interest rates earlier than expected sent prices to a
three-month low.
    Other precious metals also tumbled along with gold, as
platinum dropped to a seven-month low and silver slipped under
$19.
    Commodities were broadly under pressure as the dollar rose
to a 14-month high against the euro on optimism the U.S. economy
is growing in line with expectations that the U.S. central bank
may begin raising interest rates next year.     
    More than 12,000 lots in the benchmark COMEX December
contract changed hands in the 20 minutes after 12:00 p.m.
(1600-1620 GMT), after a drop below $1,250 support triggered a
bout of stop-loss orders, traders said.
    "Some traders have given up on gold as the $1,250 level
represents the line in the sand for many traders. Also,
geopolitical risks also appeared to be fading for now," said
Phillip Streible, senior commodities broker at RJO Futures in
Chicago. 
    Spot gold was down 0.5 percent at $1,249.34 an ounce
by 2:22 p.m., having earlier reached a fresh three-month low at
$1,247.15.
    U.S. COMEX gold futures for December delivery settled
down $5.80 an ounce at $1,248.50, with trading volume in line
with its 30-day average, preliminary Reuters data.
    Silver was down 0.5 percent at $18.89 an ounce.
    Comments from Bank of England's Governor Mark Carney about
possible rate hikes next spring and tighter credit supply by
China's Premier Li Keqiang also weighed down on gold's
inflation-hedge appeal.  
    Bright U.S. economic data has given the Fed a reason to
raise interest rates, leaving gold speculators with no choice
but to sell, said Robert Haworth, senior investment strategist
at U.S. Bank Wealth Management's Private Client Reserve in
Seattle.
    Among other precious metals, palladium was down 0.8
percent to $860, having earlier hit a one-month low at $852.30.
Palladium investors took profits after prices rallied to 13-year
high earlier this month.
    Platinum fell 0.8 percent to $1,379.75 an ounce,
having reached a seven-month low at $1,376.60.
    Russia is the world's largest producer of palladium. Worries
about supplies from Russia have prompted some investors to favor
palladium at the expense of platinum, said Thomas Capalbo,
precious metals trader at brokerage Newedge.

2:22 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
               SETTLE   CHNG  CHNG                       VOL
US Gold DEC   1248.50  -5.80  -0.5  1248.10 1258.90  109,329
US Silver DEC  18.920 -0.041  -0.2   18.890  19.105   27,220
US Plat OCT   1385.80 -11.70  -0.8  1383.20 1402.40   12,444
US Pall DEC    860.45 -25.70  -2.9   855.60  888.10    6,943

Gold          1249.34  -6.10  -0.5  1247.95 1257.99         
Silver         18.890 -0.090  -0.5   18.880  19.080
Platinum      1379.75 -11.65  -0.8  1376.60 1399.30
Palladium      856.97 -20.13  -2.3   852.30  885.50

TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
               CURRENT   30D AVG  250D AVG   CURRENT     CHG
US Gold        121,175   121,473   155,745     14.32    0.23
US Silver       27,817    55,375    52,981     17.05    0.87
US Platinum     13,710     8,893    11,746     11.42   -0.92
US Palladium     7,011     9,837     6,123     18.77    0.06

 (Additional reporting by A. Ananthalakshmi in Singapore;
Editing by David Evans, David Gregorio and Marguerita Choy)
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