PRECIOUS-Gold down 1 pct on day, posts 5th straight monthly drop

Fri Mar 1, 2013 2:35am IST

* Gold lost 5 pct in February, down for fifth straight month
    * SPDR Gold Trust on course for sharp monthly outflow
    * Lack of Fed stimulus surprise, U.S. budget cuts weigh
    * Coming up: US personal income, consumer confidence Friday

 (New throughout, updates prices and market activity, changes
byline, dateline, previous LONDON)
    By Frank Tang
    NEW YORK, Feb 28 (Reuters) - Gold fell more than 1 percent
on Thursday, as gains in U.S. equities and economic optimism
sapped safe-haven demand for the precious metal, which ended
February with its fifth straight monthly drop, the longest
string of monthly declines since 1996.
    Bullion fell sharply for a second day, after U.S. data
showed the economy grew slightly in the fourth quarter while new
claims for unemployment dropped last week. 
    Signs of an improving U.S. economy have sent the Dow Jones
industrials and the S&P 500 stock index within striking distance
of record highs. 
    Gold fell 5 percent in February and bullion holdings in
gold-backed exchange traded funds posted sharp monthly losses.
    "Investors are reassessing where they have their money
allocated at, and they are now focusing on the equity markets
which have been holding up very firm," said Phillip Streible,
senior commodities trader at futures brokerage RJ O'Brien.
    Spot gold fell 1.1 percent to $1,578.86 per ounce by
3:18 PM ( 2018 GMT). 
    U.S. gold futures for April delivery settled down
$17.60 to $1,578.10, with trading volume about 5 percent above
their 250-day average, preliminary Reuters data showed.
    Earlier this week, gold lost some appeal as an inflation
hedge when Federal Reserve Chairman Ben Bernanke did not
strongly advocate new stimulus measures in testimony before
Congress, and investors worried that deep U.S. spending cuts
could actually lead to deflation.
    It is unlikely that Congress will act to stop the $85
billion in across-the-board cuts, due to start Friday, that were
 mandated by a 2011 deficit reduction law. 
    
    GOLD ETF HOLDING DROPS AGAIN
    Reflecting the negative sentiment among fund investors, an
exodus from the SPDR Gold Trust, the world's biggest
gold-backed exchange-traded fund, continued for a seventh
consecutive session, marking the longest outflow in the fund's
history. 
    "What we are seeing just now is a lack of love from
investors towards gold," Credit Suisse commodity analyst Karim
Cherif said. 
    "Why would you be in a market that doesn't pay any dividends
and yield, and is most likely to underperform in an environment
where economic indicators are seen improving?" Cherif said.     
    Bullion has struggled so far this year after 12 years of
rising prices as signs of improving economic conditions in China
and the United States. Stabilization in much of Europe have also
lured investors away from safe-haven assets.
    Among other precious metals, silver was down 1.8
percent at $28.47 per ounce. Platinum fell 0.7 percent to
$1,584 per ounce, while palladium was down 1.8 percent to
$727.50.
 3:18 PM EST     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold APR   1578.10 -17.60  -1.1  1574.30 1602.50  175,949
 US Silver MAR  28.395 -0.548  -1.9   28.390  29.140    1,357
 US Plat APR   1583.50 -16.60  -1.0  1581.40 1607.50   10,823
 US Pall MAR    732.60 -10.55  -1.4   724.95  748.50      306
                                                               
 Gold          1578.86 -18.35  -1.1  1575.43 1602.60         
 Silver         28.470 -0.520  -1.8   28.430  29.160
 Platinum      1584.00 -11.92  -0.7  1584.00 1605.50
 Palladium      727.50 -13.50  -1.8   728.77  746.75
                                                               
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        188,553   200,742   177,166     14.96   -0.55
 US Silver       46,716    62,649    53,040     22.72   -0.52
 US Platinum     11,586    13,868    10,879     18.63    0.08
 US Palladium     5,228     8,840     5,227                  
                                                               
 
 (Additional reporting by Clara Denina in London; Editing by
David Gregorio)
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