February 26, 2014 / 11:31 AM / 4 years ago

PRECIOUS-Gold falls on dollar rise, strong U.S. home sales

* Gold posts biggest one-day loss in nearly a month
    * Surging U.S. new home sales data reduces safe-haven demand
    * Recovering gold prices rekindle fund interest in options

    By Frank Tang and Clara Denina 
    NEW YORK/LONDON, Feb 26 (Reuters) - Gold fell almost 1
percent on Wednesday, retreating from a four-month high as a
dollar rally and surging U.S. new home sales dented bullion's
safe-haven appeal.
    The precious metal accelerated losses after the Commerce
Department said that sales of new U.S. single-family homes
jumped nearly 10 percent to a 5-1/2-year high in January.
    Prior to Wednesday, gold had posted a four-day winning
streak with prices up more than 2 percent as disappointing U.S.
home prices and consumer confidence fueled concerns over the
pace of economic recovery.
    "This correction is long overdue. You are seeing improved
economic conditions continue to weigh on the market," said
Phillip Streible, senior commodities broker at RJ O'Brien. 
    Spot gold touched its highest level since Oct. 30
at$1,345.35 an ounce earlier in the day. It was last trading
down 0.8 percent at $1,328.80 by 2:16 p.m. EST (1916 GMT), its
biggest one-day loss in nearly a month.
    U.S. COMEX gold futures for April delivery settled
down $14.70 at $1,328 an ounce, with trading volume about 10
percent below its 30-day average, preliminary Reuters data
    The dollar rose to its highest level in two weeks against a
basket of major currencies. 
    The recent recovery in gold prices has rekindled interest in
gold options from hedge funds, said COMEX gold option floor
trader Jonathan Jossen. 
    However, option positioning in gold suggests futures prices
are unlikely to rise or fall in an explosive way, Jossen added.
    Traders said that gold also benefited as the world's biggest
bitcoin exchange stopped trading, a move that sparked concerns
about the future of the unregulated virtual currency.
    Also weighing on prices was news that Hong Kong's net gold
exports to China fell 5.4 percent to 89.745 tonnes in January
from 94.847 tonnes in December, reflecting a slowdown in demand
from record levels in 2013. 
    Analysts said, however, the gold market was underpinned by
an increase in holdings of bullion-backed exchange-traded funds
(ETFs), highlighting renewed investor interest in gold.
    SPDR Gold Trust, the world's largest gold-backed ETF,
said its holdings rose 0.26 percent to 803.70 tonnes on Tuesday
from 801.61 tonnes on Monday. 
    Among other precious metals, silver fell 2.6 percent
to $21.26 an ounce. Platinum dropped 0.8 percent to
$1,422.10 an ounce and palladium was down 0.5 percent at
$728.75 an ounce.
 2:16 PM EST     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold APR   1328.00 -14.70  -1.1  1322.30 1345.60  138,100
 US Silver MAR  21.254 -0.709  -3.2   21.085  22.035   69,327
 US Plat APR   1429.10 -13.50  -0.9  1425.20 1441.50    7,912
 US Pall MAR    731.50  -4.60  -0.6   726.50  737.00    5,053
 Gold          1328.80 -11.34  -0.8  1322.85 1345.35         
 Silver         21.260 -0.560  -2.6   21.110  22.020
 Platinum      1422.10 -10.80  -0.8  1427.00 1438.50
 Palladium      728.75  -3.72  -0.5   729.00  736.00
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        142,140   154,989   182,489     16.41    0.25
 US Silver      137,352    68,489    58,058     26.88   -0.94
 US Platinum      8,105     9,818    13,300     17.36    0.16
 US Palladium    13,968     7,451     5,773     13.94    0.68
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