RPT-PRECIOUS-Gold posts biggest weekly drop in five weeks

Sat Jan 26, 2013 5:58am IST

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(Repeats with no changes to story)
    * Gold falls below 200-day moving average
    * U.S. housing data, European bank repayment weigh
    * Bullion could test support at $1,640-50 before rebound
    * Coming up: U.S. durable goods on Monday

    By Frank Tang
    NEW YORK, Jan 25 (Reuters) - Gold notched its biggest weekly
drop this year as an improving global economic outlook sent the
safe-haven metal below a key technical support.
    Bullion fell below its 200-day moving average, which it had
held for the most part in the last five months, as U.S. equities
measured by the S&P 500 rose for an eighth day for its
longest winning streak in more than eight years. 
    (Graphic: r.reuters.com/wyj55t)
    Friday's encouraging U.S. housing data and signs of
stability in the euro zone pressured gold. Traders said next
week's Federal Reserve policy meeting and U.S. employment data
will likely set the tone for the gold market.
    "If next week's unemployment number comes in a little better
than expected or even at expectation, that will put pressure on
the market," said Frank McGhee, head precious metals trader at
Integrated Brokerage Services LLC.    
   Spot gold was down 0.6 percent at $1,657.54 an ounce
by 3:15 PM (2015 GMT), having earlier touched its lowest since
Jan. 11 at $1,655.39 an ounce. 
    The metal was 1.5 percent lower this week, its worst weekly
performance since the week of Dec. 23.
    Gold could rise toward $1,680 late next week after a test of
support at $1,640-1,650 due to weak technical momentum, said
Carlos Sanchez, director of commodities and asset management at
CPM Group.
    Gold priced in euros fell further, touching an
eight-month low at 1,230.03 euros an ounce, as the single unit
rallied on news banks will pay more cash than expected back to
the European Central Bank in a sign that the banking system was
stabilising. 
    Gold also came under pressure after data showed sales of new
U.S. single-family homes rose last year to the highest since
2009 despite a weak December. 
    U.S. COMEX gold futures for February delivery settled
down $13.30 at $1,656.60 an ounce. 
    Trading volume was 10 percent above its 250-day average,
preliminary Reuters data showed, partially boosted by
February-April contract rollover ahead of February's
first-notice day on Jan. 31. 
    Silver, which tends to be more volatile than gold,
dropped 1.5 percent to $31.14 an ounce. 
    
    PHYSICAL DEMAND IMPROVING  
    Bullion buying from China and India, the world's two largest
gold consumers, has dwindled after a brisk start in the first
two weeks of January, dealers said.
    The price slump of the past few days, however, has triggered
some physical buying interest, they said.
    Bullion investors now await next week's Fed Open Market
Committee (FOMC) statement on Wednesday and nonfarm payrolls on
Friday for more clues on U.S. monetary policy and the state of
the world's largest economy. 
    Among platinum group metals, platinum was up 0.7
percent at $1,690.12 for a nearly 1.5 percent weekly gain,
extending its winning streak to a fourth week, its longest in a
year. Spot palladium rose 1.9 percent to $737.81 an
ounce.  
        
 3:15 PM EST     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold FEB   1656.60 -13.30  -0.8  1655.00 1671.60  146,258
 US Silver MAR  31.206 -0.516  -1.6   31.125  31.815   40,234
 US Plat APR   1694.90  11.10   0.7  1675.00 1695.90    9,439
 US Pall MAR    741.00  14.30   2.0   723.10  742.10    6,878
                                                               
 Gold          1657.54  -9.82  -0.6  1655.39 1672.20         
 Silver         31.140 -0.490  -1.5   31.140  31.760
 Platinum      1690.12  12.13   0.7  1677.50 1691.50
 Palladium      737.81  13.84   1.9   725.50  739.50
                                                               
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        193,200   151,420   174,136     13.63    0.95
 US Silver       43,205    42,524    53,317     19.91    0.00
 US Platinum      9,598    15,747    10,839     16.96   -0.11
 US Palladium     6,960     3,314     4,797                  
                                                               
    

 (Additional reporting by Clare Denina and Jan Harvey in London;
editing by Sofina Mirza-Reid and Carol Bishopric)
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