NEW YORK/LONDON (Reuters) - Gold dropped around 1 percent on Thursday, losing its usual safe-haven appeal as anxiety over the lack of progress to boost the euro zone bailout fund magnified worries about weak demand and global growth.
Bullion’s biggest daily drop in two weeks paralleled falling industrial commodities on news of deep divisions between France and Germany over how to strengthen the EFSF bailout fund, while the International Monetary Fund and the European Union are at odds over how to tackle Greek debts ahead of a key European summit on Sunday.
The metal has fallen 4 percent during its current four-day losing streak, largely moving lower in tandem with riskier assets such as equities. Copper, the bellwether industrial metal, dropped more than 5 percent on Thursday, beset by economic jitters.
“Every time there has been flare-ups that the EU would not get its act together, gold did not go up. So, the premise for owning gold is no longer there,” said Adam Klopfenstein, senior market strategist at futures broker MF Global.
“Gold won’t regain its upward trend unless we see gold go up in the face of weakness in equities,” he said.
Spot gold fell 1.2 percent to $1,621.11 an ounce by 2:55 p.m. EDT.
U.S. December gold futures settled down $34.10 at $1,612.90. Volume for Thursday’s pullback was among the highest in the last two weeks, in line with its 30-day average.
Silver fell 1.7 percent to $30.43 an ounce.
Funds are staying put with their gold futures positions as they rolled their put options to December and February from November ahead of next week’s COMEX November expiry, said independent COMEX gold option floor trader Jonathan Jossen.
Fund investors usually buy puts to hedge against downside risks for their underlying gold futures.
Jossen said gold option volatility has increased as calls were bid up by investors wanting to hedge their risks due to high uncertainty about the situation in Greece and the EU.
Bullion investors now look forward to possible details of plans to contain the nearly two-year-old euro zone debt crisis at Sunday’s European summit.
But the market remains nervous as Greek police clashed with demonstrators and workers began their biggest strike in years in protest at budget cuts demanded of their country.
On charts, gold briefly broke below its 150-day average at $1,605 an ounce, which it had held for three weeks. Technical selling accelerated after a break below its 100-day moving average on Wednesday, analysts said.
“There is no real support for gold until it trades back toward $1,550-1,575. We fear it may get there faster than anyone might wish to imagine given the liquidation pressure taking place,” independent investor Dennis Gartman said.
Among platinum group metals, palladium was last down 1.8 percent at $586.25 an ounce, while platinum fell 1.2 percent to $1,492.24 an ounce.
SETTLE CHNG CHNG VOL US Gold DEC 1612.90 -34.10 -2.1 1604.70 1646.50 170,438 US Silver DEC 30.281 -0.996 -3.2 29.935 31.375 50,606 US Plat JAN 1490.40 -32.70 -2.1 1466.00 1521.80 8,687 US Pall DEC 584.40 -24.00 -3.9 578.00 609.50 4,534
Gold 1621.11 -20.19 -1.2 1604.25 1644.50 Silver 30.580 -0.390 -1.3 29.950 31.340 Platinum 1492.24 -18.11 -1.2 1467.75 1517.00 Palladium 586.25 -11.00 -1.8 581.60 606.75
TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG US Gold 176,400 199,253 201,393 32.11 2.78 US Silver 54,586 53,921 81,690 52.94 0.93 US Platinum 8,758 11,682 7,698 35 0.00 US Palladium 4,542 3,833 4,516
Additional reporting by Amanda Cooper in London and Rujun Shen in Singapore; Editing by Alden Bentley and Dale Hudson