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PRECIOUS-Gold falls 1.6 pct, notches second sharp monthly loss
May 31, 2013 / 10:16 AM / 4 years ago

PRECIOUS-Gold falls 1.6 pct, notches second sharp monthly loss

* Gold drops more than 5 percent in May
    * Open interest in U.S. gold futures hits near 4-year low
    * Funds remain bearish after mid-April selloff
    * Coming up: U.S. construction spending data on Monday

 (Adds comment, market details, updates prices)
    By Frank Tang and Clara Denina 
    NEW YORK/LONDON, May 31 (Reuters) - Gold fell almost 2
percent on Friday after U.S. data showing low inflation and
improving consumer confidence dampened investor interest, with
bullion notching sharp losses for a second consecutive month.
    A combination of decreasing fund interest, option expiration
and squaring of books after investors covered short positions
also sent open interest in U.S. gold futures to its lowest in
almost four years, traders said.
    Data showing a six-year high in consumer sentiment weighed
on gold, a traditional safe haven. 
    "The metals were already under pressure going into the end
of the month as many people have a lot of short positions
outstanding, and the consumer confidence data just added fuel to
selling," said Carlos Perez-Santalla at brokerage Marex
    Spot gold fell 1.6 percent to $1,390.80 an ounce by
3:17 p.m. EDT (1917 GMT), its biggest one-day loss in two weeks.
    U.S. Comex gold futures for August delivery settled
down $19 at $1,393 an ounce, with trading volume about 30
percent below its 30-day average, preliminary Reuters data
    Gold had gained more than 3 percent in the prior three
sessions as discouraging U.S. growth data and jobless claims
figures boosted hopes for continued Federal Reserve stimulus.
    But for the month of May, gold dropped 5.8 percent following
April's decline of more than 7 percent.
    On Thursday, CME data showed Comex gold futures' open
interest inched up less than 1 percent to 385,901 contracts,
hovering near its lowest level since September 2009. The market
gauge was 13 percent lower versus 445,517 lots last Thursday.
    Economic optimism and growing investor interest in
better-performing assets such as equities explained declining
interest in the safe-haven metal, traders said.
    Holdings in the SPDR Gold Trust, the world's largest
gold-backed exchange-traded fund, remained unchanged at 1,013.15
tonnes on Thursday, after rising for the first time in three
weeks on Wednesday. But these are still near four-year lows,
having lost nearly 337 tonnes in 2013 so far. 
    Dealers said interest in physical buying stayed higher after
a mid-April selloff sent the precious metal to two-year lows.
    "While all these momentum sellers were getting out of the
ETFs, people who are interested in physical gold view it as a
buying opportunity," said Edmund Moy, chief strategist of Morgan
Gold, which offers physical precious metals in retirement
    Among other precious metals, silver fell 2.3 percent
to $22.21 an ounce. Platinum dropped 1.6 percent to
$1,457.49 an ounce and palladium was down 0.9 percent at
$748.47 an ounce.

 3:17 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold AUG   1393.00 -19.00  -1.3  1387.00 1421.60  152,517
 US Silver JUL  22.243 -0.447  -2.0   22.100  22.855   39,598
 US Plat JUL   1461.80 -20.90  -1.4  1453.50 1484.00   10,047
 US Pall SEP    753.65  -6.90  -0.9   742.00  760.00    2,861
 Gold          1390.80 -22.45  -1.6  1389.80 1421.00         
 Silver         22.210 -0.520  -2.3   22.200  22.900
 Platinum      1457.49 -24.01  -1.6  1459.00 1483.00
 Palladium      748.47  -7.03  -0.9   743.50  756.22
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        165,395   230,119   181,650     21.06    0.01
 US Silver       43,897    63,237    55,479     33.53   -2.58
 US Platinum     11,079    10,859    11,713      22.5   -0.60
 US Palladium     3,067     7,006     5,607                  
 (Additional reporting by A. Ananthalakshmi in Singapore;
Editing by David Gregorio and Dale Hudson)

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