June 20, 2013 / 4:17 AM / 4 years ago

PRECIOUS-Gold falls to 2-month lows on stimulus outlook

* Gold falls for fourth session, down nearly 2 percent
    * Fed to scale back bond purchases later this year
    * Asian stocks ex-Japan suffer biggest daily loss since late
2011

 (Updates prices)
    By A. Ananthalakshmi
    SINGAPORE, June 20 (Reuters) - Gold fell for a fourth
straight session on Thursday to its lowest level since a 15
percent plunge in mid-April, after the U.S. Federal Reserve
signalled it would slow the pace of bond purchases later this
year.
    A scale-back of the $85 billion monthly asset purchases is
likely to weaken support for gold prices, already down about 20
percent this year due to rapid outflows from exchange-traded
funds and slowing demand in top consumers, India and China. 
    Spot gold fell 1.6 percent to $1,328.75 an ounce by
0709 GMT, down more than 4 percent for the week. It fell to
$1,322.79 earlier in the session - not far off the lows in
mid-April when gold fell the most in 30 years.
    "I wouldn't be in a rush to say it's the end of gold," said
Amber MacKinnon, an analyst at Nomura Securities in Sydney.
"This is definitely a big turning point. But though we have seen
some reasonable amount of stability in the U.S. economy, there
is still a long way to run."
    "Early next year will be pretty telling in terms of economic
data. We'll have to see how unemployment reacts to any
scale-back in bond purchases."
    Fed Chairman Ben Bernanke said on Wednesday the central bank
will continue to reduce the pace of bond purchases in measured
steps through the first half of next year, ending purchases
around mid-year if the U.S. economy continued to show strength.
  
    Until recently, gold - seen as a hedge against inflation -
had gained as the global economy took a hit and central banks
acted to boost their economies. Gold touched an all-time high of
$1,920.30 in 2011.
    U.S. gold fell over 3 percent, or $46, to $1,327.90,
close to its two-month low. Silver, platinum and
palladium all tracked gold lower.
    Holdings of SPDR Gold Trust, the world's largest
gold-backed exchange-traded fund, fell below 1,000 tonnes on
Wednesday for the first time in 4 years. 
    "With the negative sentiment that we have in gold currently,
we really do need to see a significant amount of physical buying
in order to stabilize the market - which we are not seeing,"
said Mark Keenan, cross-commodity research strategist at Societe
Generale in Singapore. 
    SocGen lowered its forecast for gold earlier this week,
saying prices will fall to $1,200 an ounce by the end of the
year, mainly due to the Fed's expected pullback in bond buying. 
    Demand in India has fallen since the government hiked the
import duty on bullion and China demand has slowed from peak
levels seen earlier in the year.
    China's factory activity weakened to a 9-month low in June
as demand faltered, a preliminary survey showed, heightening
risks that a second quarter slowdown could be sharper than
expected. 
    Asian stocks outside Japan suffered their biggest daily loss
since late 2011, key lending rates in China reached historic
highs and India's currency carved out a record low following
Bernanke's comments. 
    
  Precious metals prices 0709 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1328.75  -21.94   -1.62    -20.65
  Spot Silver        20.71   -0.60   -2.82    -31.61
  Spot Platinum    1405.24   -4.76   -0.34     -8.45
  Spot Palladium    684.50   -9.50   -1.37     -1.08
  COMEX GOLD AUG3  1327.90  -46.10   -3.36    -20.76        52121
  COMEX SILVER JUL3  0.21   -0.01   -4.43    -99.32        17386
  Euro/Dollar       1.3254
  Dollar/Yen         97.49
 
  COMEX gold and silver contracts show the most active months
 
 (Reporting by A. Ananthalakshmi; Editing by Richard Pullin and
Michael Perry)

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