PRECIOUS-Gold falls 1 pct on Fed worries; equities steady

Tue Jan 28, 2014 2:36am IST

* Equities recovery triggers profit-taking in gold
    * Worries Fed set to trim stimulus further weigh
    * Chinese gold imports hit record in 2013
    * Coming up: U.S. durable goods Tuesday

 (Adds option market details, updates market activity)
    By Frank Tang and Jan Harvey
    NEW YORK/LONDON, Jan 27 (Reuters) - Gold fell around 1
percent on Monday, retreating from a two-month high earlier in
the session, as a steadier U.S. equities market and jitters
ahead of a key Federal Reserve meeting this week triggered
profit taking. 
    The metal was weighed down by expectations that the Fed
could trim monetary stimulus further from the $10
billion-a-month reduction to its bond purchases decided in
December. The Federal Open Market Committee is scheduled to
begin its two-day policy meeting on Tuesday.
    Bullion initially rallied toward $1,280 an ounce after data
showed Chinese gold imports from Hong Kong surged to a record
high in 2013. 
    However, the metal tumbled about $25, or 2 percent, from its
high after U.S. equities pared early losses in New York
afternoon trade, halting last week's heavy pullback that had
benefited gold. The S&P 500 index fell about 0.3 percent.
    "Gold could fall further after a technical key reversal off
its high earlier today," said Frank McGhee, head precious metals
dealer at Chicago commodities brokerage Alliance Financial LLC.
    Spot gold was down 1.2 percent at $1,253.69 an ounce
by 3:35 p.m. EST (2035 GMT), having hit a two-month high of
$1,278.01.
    Last week, gold was up about 1 percent, its fifth
consecutive weekly rise for the first time since September 2012.
 
    U.S. COMEX gold futures for February delivery settled
down 90 cents an ounce at $1,263.40, with trading volume about
10 percent above its 250-day average, preliminary Reuters data
showed.
    Year-to-date, gold is up more than 4 percent as slumping
U.S. stock markets prompted investors increase their gold
positions by selling equities.
    A steadier gold market was reflected in falling option
volatilities. The one-month at-the-money implied volatility
 was currently at 15, about half of its two-year high
of 32 set in April 2013.
    "The price of volatility is now low enough that investors
can buy options to realize profits on movements," said COMEX
gold option floor trader Jonathan Jossen. 
    
    CHINESE DEMAND EASES
    China's net gold imports from Hong Kong rose 24 percent in
December from the previous month, the Hong Kong Census and
Statistics Department said, bringing purchases for 2013 to a
record 1,158 tonnes. 
    More positively for gold, India's finance ministry said it
will review its tight curbs on gold imports by the end of March.
 
    Among other precious metals, silver was down 1.4
percent to $19.58 an ounce. Platinum fell 1.3 percent to
$1,405.25 an ounce, while palladium dropped 1.9 percent
to $718.10 an ounce.
 3:35 PM EST     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold FEB   1263.40  -0.90  -0.1  1251.90 1279.80  146,235
 US Silver MAR  19.793  0.028   0.1   19.550  20.090   34,661
 US Plat APR   1421.10  -7.50  -0.5  1407.10 1439.80   10,512
 US Pall MAR    722.55 -12.25  -1.7   721.75  737.75    4,268
                                                               
 Gold          1253.69 -14.95  -1.2  1252.53 1278.01         
 Silver         19.580 -0.280  -1.4   19.590  20.070
 Platinum      1405.25 -18.00  -1.3  1410.40 1436.25
 Palladium      718.10 -13.65  -1.9   724.00  735.00
                                                               
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        204,784   143,041   187,684     17.98    0.53
 US Silver       38,638    40,235    57,227      26.7    0.84
 US Platinum     10,726    11,252    12,704     17.76    2.75
 US Palladium     5,415     3,195     5,857      15.2   -1.88
                                                               
 
 (Additional reporting by A. Ananthalakshmi in Singapore;
Editing by Dale Hudson, David Goodman, James Dalgleish and
Marguerita Choy)
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