January 28, 2014 / 1:00 PM / 5 years ago

PRECIOUS-Gold falls for second day as equities rise; Fed eyed

* Emerging markets, stocks recover after hefty losses
    * Selling related to option expiration weighs on gold
    * Federal Reserve begins two-day policy meeting
    * Coming up: Federal Open Market Committee policy statement
Weds

 (Adds comment, second byline, dateline, updates market
activities)
    By Frank Tang and Jan Harvey
    NEW YORK/LONDON, Jan 28 (Reuters) - Gold fell on Tuesday,
extending the previous session's 1 percent drop, as global
equities rebounded from a one-month low and emerging markets
stabilized after three days of intense selling.
    Liquidation pressure related to an option expiry and
encouraging data on U.S. consumer confidence also weighed down 
gold's safe-haven appeal.
     "I think that the better-than-expected consumer confidence
and the constant feeling that the Fed will continue tapering for
the rest of the year are weighing down on gold prices," said
Thomas Capalbo, a precious metals trader at Newedge, a brokerage
in New York.
     The precious metal was under pressure on speculation that
the Federal Reserve will make a $10 billion cut to the U.S.
central bank's $75 billion monthly bond-buying stimulus. Fed
tapering worries were a major factor in gold's 28 percent price
crash last year. 
    The Fed is likely to leave intact their delicately worded
easy-money message in its closely watched policy statement when
it concludes its two-day meeting on Wednesday.
    Spot gold was down 0.4 percent at $1,250.80 an ounce
by 2:56 p.m. EST (1956 GMT).
    U.S. COMEX gold futures for February delivery settled
down $12.60 an ounce at $1,250.80, with trading volume about 25
percent above its 250-day average, preliminary Reuters data
showed. 
    Trading volume was about 25 percent higher than its 250-day
average, preliminary Reuters data showed.
    Traders said selling related to Tuesday's expiration of
COMEX February options also pressured gold futures prices.
Over-the-counter gold options are scheduled to expire on
Wednesday.
    Investors have been shaken this week by a huge sell-off in
so-called risk assets due to jitters about the withdrawal of
U.S. monetary stimulus, slowing Chinese growth and
country-specific political tensions. 
    Gold rallied to a five-month high last week as a global
flight from emerging-market assets and equities declines
increased bullion buying.
    In official-sector gold news, data from the International
Monetary Fund showed on Tuesday that Kazakhstan lifted its gold
reserves by 2.39 tonnes in December, while Belarus, Ukraine and
Azerbaijan all also added to reserves. 
    Among other precious metals, silver fell 0.9 percent
to $19.50 an ounce. Palladium was down 0.7 percent at
$714.75 an ounce, and platinum fell 0.3 percent to
$1,402.75 an ounce.
    Platinum group metal prices fell, even though
government-brokered talks between the world's top three platinum
producers and South Africa's Association of Mineworkers and
Construction Union (AMCU) seeking to end a crippling strike
ended on Tuesday with no resolution in sight. 
 2:56 PM EST     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold FEB   1250.80 -12.60  -1.0  1248.20 1262.30  139,622
 US Silver MAR  19.503 -0.290  -1.5   19.455  19.840   32,586
 US Plat APR   1409.40 -11.70  -0.8  1404.60 1424.80    8,095
 US Pall MAR    716.50  -6.05  -0.8   714.40  725.50    5,820
                                                               
 Gold          1250.80  -5.64  -0.4  1249.65 1261.05         
 Silver         19.500 -0.180  -0.9   19.480  19.820
 Platinum      1402.75  -4.25  -0.3  1407.25 1421.25
 Palladium      714.75  -5.25  -0.7   717.25  723.00
                                                               
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        235,119   143,041   187,684      18.1    0.12
 US Silver       35,876    40,235    57,227     27.44    0.74
 US Platinum      8,256    11,252    12,704     18.58    0.82
 US Palladium     7,731     3,195     5,857     16.09    0.89
                                                               
   

 (Additional reporting by A. Ananthalakshmi in Singapore;
editing by Keiron Henderson, Jane Baird and David Evans)
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