PRECIOUS-Gold down almost 1 percent after failing to rally

Fri Feb 1, 2013 1:31am IST

* Dollar strength, profit-taking weigh on gold prices
    * CME to add PGM options on Globex
    * Coming up: U.S. nonfarm payrolls Friday

 (New story, adds second byline and dateline, pvs LONDON)
    By Frank Tang and Clara Denina 
    NEW YORK/LONDON, Jan 31 (Reuters) - Gold fell nearly 1
percent on Thursday on technical selling after the previous
session's rally, with investors focused on the all-important
U.S. nonfarm payrolls report for a clue to  the Federal
Reserve's monetary outlook.
    The metal hit a two-week high at above $1,680 an ounce on
Wednesday after data showed the U.S. economy unexpectedly shrank
in the fourth quarter, with gold holding those gains after the
Federal Reserve pledged to maintain a monthly $85 billion
bond-buying program. 
    However, bullion's repeated failure to rise above major
resistance at $1,700 in January triggered technical selling,
traders said.
    "I would buy puts on any rallies. The market looks bearish
as option volatilities are falling," said COMEX gold options
floor trader Jonathan Jossen.
    Spot gold was down 0.9 percent at $1,661.25 an ounce
by 2:14 p.m. EST (1914 GMT)
    U.S. COMEX gold futures for February delivery settled
down $19.30 an ounce at $1,660.60, with trading volume about 10
percent below its 250-day average, preliminary Reuters data
showed.
    Analysts said that the market had already priced in that it
would be premature for the U.S. central bank to withdraw
economic stimulus, and that explained bullion's muted reaction
to Wednesday's Federal Open Market Committee (FOMC) statement.
    Thursday's data which showed improving American income
growth in December and better wage growth also dent's gold's
safe-haven appeal, traders said. 
    Spot silver followed gold's movements, losing 2.1
percent to $31.35, after a near 3 percent rise to $32.23 on
Wednesday.    
       
    ALL EYES ON NONFARM PAYROLLS
    Investors are now waiting for nonfarm payrolls data on
Friday for a close look at the U.S. labor market. Economists
surveyed by Reuters expect steady hiring from employers in
January. 
    Gold is still facing strong resistance at $1,700, which it
failed to breach despite repeated attempts earlier in the month,
analysts have said.
    In the physical market, gold purchases lost steam this week
as stockpiling in China and other Asian markets ahead of the
Lunar New Year drew to a close and as Indian buyers remained on
the sidelines, with ample inventory in hand. 
    Among platinum group metals, Spot platinum fell 0.6
percent to $1,672.50, while palladium was down 0.8
percent to $740.47, having hit a fresh 16-month high of $756 an
ounce on Wednesday.
    The CME Group CME.O said it will add platinum and palladium
options onto its Globex electronic platform beginning late in
February in a move to capitalize on growing investor interest in
platinum group metals (PGMs). 

 2:14 PM EST     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold FEB   1660.60 -19.30  -1.1  1657.40 1680.00    5,589
 US Silver MAR  31.351 -0.826  -2.6   31.120  32.130   51,207
 US Plat APR   1675.40 -13.90  -0.8  1666.20 1689.20    9,247
 US Pall MAR    745.70  -5.70  -0.8   735.45  752.35    6,803
                                                              
 Gold          1661.25 -15.45  -0.9  1658.40 1680.40         
 Silver         31.350 -0.670  -2.1   31.140  32.110
 Platinum      1672.50  -9.74  -0.6  1668.50 1684.50
 Palladium      740.47  -6.28  -0.8   738.50  749.50
                                                              
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        162,563   166,278   172,537     13.67   -0.12
 US Silver       56,694    42,520    51,731     21.76    1.49
 US Platinum      9,477    19,037    10,971      16.5    0.06
 US Palladium     7,108     3,632     4,671                  
                                                              
    

 (Editing by Grant McCool)

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