PRECIOUS-Gold falls to one-month low on fund sales, technicals

Thu Dec 6, 2012 2:34am IST

* Fund liquidation, technical selling weigh on gold
    * Goldman Sachs predicts turn in gold's bull cycle
    * South Korea bought 14 T gold in November
    * Coming up: U.S. weekly jobless claims Thursday

 (Adds market details, updates prices)
    By Frank Tang
    NEW YORK, Dec 5 (Reuters) - Gold slipped to a one-month low
below $1,700 an ounce on Wednesday as a weaker price forecast by
Goldman Sachs triggered some fund liquidation, offsetting news
of fresh central bank buying. 
    Bullion later rebounded off its lows to end down 0.2
percent. Earlier in the session, it was under technical selling
below its 100-day moving average and after it broke through
support at Tuesday's low at $1,690.64.
    Gold was pressured after Goldman Sachs cut its 2013 gold
outlook and said the metal's current bull cycle will likely turn
next year as rising real interest rates and better growth offset
monetary stimulus from the U.S. Federal Reserve. 
    "There is some heavy selling by fund investors and leveraged
money, but physical gold demand should benefit in the long run
from the fiscal cliff after these short-term fluctuations," said
Miguel Perez-Santalla, vice president of physical gold dealer
BullionVault.       
    Spot gold was down 0.2 percent at $1,693.65 an ounce
by 3:37 p.m. EST (2037 GMT), having earlier hit a low of
$1,684.40, the weakest since Nov. 6.
    U.S. COMEX gold futures for December delivery settled
down $2 an ounce at $1,693.80, with trading volume more than 20
percent below its 30-day average, preliminary Reuters data
showed.
    Republicans and Democrats dug in on U.S. budget talks to
avoid the $600 billion in tax hikes and spending cuts due to
kick in the New Year on Wednesday, with both sides urging quick
action but offering no compromises in a political stare-down
that shows no signs of breaking. 

    PHYSICAL BUYING STRONG
    Despite gold's recent pullback, physical demand should
underpin the market at lower prices, traders said.
    Holdings of the world's largest gold-backed exchange-traded
fund, New York's SPDR Gold Trust, hit a record high as the
fund reported a 2.4 tonne inflow on Tuesday. 
    Similarly, physical coin and bullion sales also received a
boost from uncertainty surrounding the fiscal cliff. 
    U.S. Mint's November gold coin sales had their highest
November performance in 14 years, while gold dealer BullionVault
also said it notched net buying of nearly 18,000 ounces in
November for a second straight monthly rise.
    The metal rose in early session after South Korea's central
bank said it bought 14 tonnes of the metal in November, its
fourth purchase in about 1-1/2 years.
    Central banks have switched to being net buyers of gold from
net sellers in the last two years, with most acquisitions made
by banks in Asia and the developing world. Central banks buying
accounted for 455 tonnes of demand last year.
    Among other precious metals, silver was down 0.2
percent at $32.86 an ounce, platinum inched up 40 cents
to $1,579.50, and palladium edged up 0.5 percent at $681.
 3:37 PM EST     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold FEB   1693.80  -2.00  -0.1  1686.00 1708.30  141,053
 US Silver MAR  32.957  0.149   0.5   32.585  33.300   38,087
 US Plat JAN   1584.20   1.30   0.1  1571.00 1597.50    8,288
 US Pall MAR    687.45   4.75   0.7   673.25  689.80    3,488
                                                               
 Gold          1693.65  -3.09  -0.2  1684.40 1706.60         
 Silver         32.860 -0.050  -0.2   32.550  33.230
 Platinum      1579.50   0.40   0.0  1574.50 1594.00
 Palladium      681.00   3.30   0.5   675.02  686.00
                                                               
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        151,412   186,372   174,754     12.98   -0.12
 US Silver       40,111    59,041    52,743     22.81    0.14
 US Platinum      9,293     8,678     8,818     17.86   -0.55
 US Palladium     3,498     6,070     4,748                  
                                                               
 

 (Additional reporting by Jan Harvey and David Brough in London;
Editing by Bob Burgdorfer and Marguerita Choy)
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