PRECIOUS-Gold drops 1.2 pct as Wall Street gains trigger profit-taking

Tue Mar 18, 2014 1:28am IST

Related Topics

* Tensions ease in Crimean peninsula after referendum
    * Technical selling may limit gold's rise
    * SPDR Gold Trust reports inflows
    * Coming up: U.S. consumer price index on Tuesday

 (Adds details, updates market prices)
    By Frank Tang and Clara Denina 
    NEW YORK/LONDON, March 17 (Reuters) - Gold prices fell more
than 1 percent on Monday, the biggest one-day drop since late
January, as a sharp rally in U.S. equities triggered
profit-taking after bullion briefly rose to a six-month high
earlier in the day.
    Wall Street, as measured by the benchmark S&P 500 index
, rose about 1 percent as East-West tensions over Crimea
eased after many in the region voted to join Russia and the
referendum passed without violence. 
    Analysts said even though gold may extend gains in the short
term on geopolitical tensions and worries about China's economic
slowdown, the yellow metal is due for a pullback after recent
gains.
    "Correction potential is building up, which would come into
play if the Crimean crisis were to ease," said Eugen Weinberg,
head of commodity research at Commerzbank.
    Last week, gold posted a 3 percent gain, its sixth
consecutive weekly gain, after Russia reiterated its threat to
invade other parts of Ukraine, showing no sign of heeding
Western pleas to back off from a Cold War-style confrontation.
    Spot gold was down 1.2 percent at $1,365 an ounce by
3:35 p.m. EDT (1935 GMT), having earlier hit its highest since
Sept. 9 at $1,391.76.
    U.S. COMEX gold futures settled down $6.10 at
$1,372.90 an ounce, with trading volume on track to finish in
line with its 30-day average, preliminary Reuters data showed.
    Gold's losses were limited after the United States and the
European Union imposed sanctions, including asset freezes and
travel bans, on a small group of officials from Russia and
Ukraine after the weekend referendum. 
    Technical selling and renewed liquidation by hedge funds
could also limit the precious metal's gain, analysts said.
    Gold's recent rally to six-month highs may spark a further
jump to levels last seen in the second half of 2013, but fresh
highs could be followed by a slide back to three-year lows,
technical analysts said. 
    Traders now await the Federal Reserve's policy meeting on
Tuesday and Wednesday. The U.S. central bank is expected to
announce another $10 billion cut to its bond-buying stimulus.
    New money has been flowing into gold-backed exchange-traded
funds (ETFs) as investors seek safety from riskier assets during
times of uncertainty. Holdings in SPDR Gold Trust, the
world's largest gold-backed ETF, rose 3.29 tonnes to 816.59
tonnes on Friday. 
    Among other precious metals, silver fell 1.4 percent
to $21.13 an ounce. Platinum edged down 0.1 percent to
$1,460.50 an ounce, while palladium rose 0.4 percent to
$769.25 an ounce.
    
ALL PRICES AS OF 1535 PM EDT:
    
                LAST/    NET   PCT      LOW    HIGH  CURRENT
               SETTLE   CHNG  CHNG                       VOL
US Gold APR   1372.90  -6.10  -0.4  1361.90 1392.60  144,205
US Silver MAY  21.275 -0.138  -0.6   21.150  21.650   31,616
US Plat APR   1468.40  -1.20  -0.1  1465.80 1483.20    7,826
US Pall JUN    776.40   3.15   0.4   770.00  780.90    2,880
Gold          1365.00 -16.74  -1.2  1362.88 1391.76         
Silver         21.130 -0.310  -1.4   21.160  21.620
Platinum      1460.50  -1.30  -0.1  1466.00 1480.00
Palladium      769.25   2.85   0.4   770.50  778.50
TOTAL MARKET              VOLUME          30-DAY ATM  VOLATILITY
               CURRENT    30-DAY    250-DAY  CURRENT     CHG
                           AVG       AVG  
US Gold        156,364   160,123   184,909     17.76   -0.15
US Silver       32,732    75,035    58,131     27.64    0.87
US Platinum      9,597    12,945    13,117     19.04    0.67
US Palladium     2,898     8,161     5,683     20.83    0.61

 (Additional reporting by A. Ananthalakshmi in Singapore;
editing by G Crosse)
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