January 16, 2014 / 11:36 AM / 4 years ago

PRECIOUS-Gold flat as data shows job market firms, inflation tame

* Core CPI up 0.1 pct in December, inflation weak
    * Option dealers expect prices to rise gradually near term
    * Platinum group metals up on imminent S.Africa strike
    * Coming up: U.S. housing starts Friday

 (Adds comment, second byline, NEW YORK dateline, updates market
    By Frank Tang and Clara Denina 
    NEW YORK/LONDON, Jan 16 (Reuters) - Gold prices ended
largely flat on Thursday after two consecutive days of losses,
as data showing a strengthening U.S. labor market and improving
regional manufacturing activity dampened buying interest.
    A small gain in the core U.S. Consumer Price Index in
December also weighed down on gold's inflation-hedge appeal.
    Thursday's economic reports showed the number of Americans
filing new claims for unemployment benefits fell for the second
consecutive week last week, while Mid-Atlantic manufacturing
activity accelerated in December. 
    Investors mostly stayed on the sidelines, reflected in a
narrow $12 trading range in spot gold.
    Traders said that gold price volatility is likely to fall
    "The dealers are selling options to capture premiums on
falling volatilities, suggesting they expect gold prices to rise
slowly in the near term," said COMEX gold options floor trader
Jonathan Jossen. 
    Spot gold inched up 0.1 percent to $1,241.99 an ounce
by 3:11 p.m. EST (2011 GMT).
    U.S. gold futures for February delivery settled up
$1.90 at $1,240.20 an ounce, with trading volume about 30
percent below its 250-day average, preliminary Reuters data
    The Labor Department said the so-called core CPI, which
stripped out the volatile energy and food components, rose only
0.1 percent, leaving its increase over the past 12 months at 1.7
percent, where it has now been for four consecutive months.
    The Fed targets 2 percent inflation, although it tracks a
gauge that tends to run a bit below CPI.
    U.S. jobless claims also fell, suggesting a sharp step-down
in job growth showed in the December nonfarm payrolls report was
likely to be temporary.
    Markets are closely watching data to gauge whether the U.S.
Federal Reserve will have enough evidence of economic recovery
to continue unwinding its bond-buying stimulus over 2014.
    The next meeting of the Federal Open Market Committee is on
Jan. 28-29.
    Among precious metals, silver fell 0.3 percent to
$20.07 an ounce.
    Platinum rose 0.2 percent to $1,425.99 an ounce,
while palladium edged up 0.1 percent to $740.47 an ounce.
    Supply worries supported platinum group metals after South
Africa's Association of Mineworkers and Construction Union
(AMCU) said its members had voted in favour of a strike over
wages at world No. 3 platinum producer Lonmin and they
would down tools next week. 
 3:11 PM EST     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold FEB   1240.20   1.90   0.2  1235.80 1244.90   97,638
 US Silver MAR  20.054 -0.080  -0.4   19.970  20.250   26,742
 US Plat APR   1431.50   2.90   0.2  1418.20 1437.30    6,539
 US Pall MAR    743.90  -0.10   0.0   738.00  746.55    2,487
 Gold          1241.99   0.63   0.1  1236.70 1244.80         
 Silver         20.070 -0.070  -0.3   20.000  20.240
 Platinum      1425.99   2.24   0.2  1420.75 1430.75
 Palladium      740.47   0.97   0.1   739.90  743.47
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        126,992   134,751   187,594     17.78   -0.31
 US Silver       33,137    39,068    57,442     24.87    0.02
 US Platinum      6,562    13,387    12,721     15.23   -1.72
 US Palladium     2,534     3,035     5,840     16.88    0.03

 (Editing by Keiron Henderson and Marguerita Choy)
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