* Breaks below 200-day moving average first time in 4 months
* Gold down 3 pct in last three days, options turn bearish
* Hedge fund selling, better U.S. GDP growth weigh
* RSI shows gold oversold for first time since May
* Coming up: U.S. personal income, core PCE price index Fri.
(Adds markets details, updates prices)
By Frank Tang
NEW YORK, Dec 20 Gold plunged below $1,650 an
ounce on Thursday, down more than 1 percent, and to its lowest
since August as heavy liquidation by hedge funds and signs of an
improving U.S. economy triggered selling.
The metal broke below its 200-day moving average, which it
had held for four months, as safe-haven bidding faded following
a government report that showed the U.S. economy grew at a
faster-than-expected 3.1 percent annual rate in the third
Silver also dived over 3 percent and platinum group metals
each fell around 2 percent.
Also weighing on gold was news Morgan Stanley Smith Barney
has recommended its financial advisers pull client money out of
long-time gold bull John Paulson's funds. The announcement
stirred speculation the billionaire hedge-fund manager might
need to liquidate gold investments.
"There is a concern among the hedge funds that they will
have more redemptions because of the fact that they
underperformed the markets this year as a whole," said Jeffrey
Sica, chief investment officer of SICA Wealth Management which
has over $1 billion in assets.
Spot gold was down 1.1 percent at $1,647.40 an ounce
by 4:13 p.m. EST (2113 GMT), having hit a low of $1,635.09,
which marked the weakest since Aug. 22.
Silver, which often displays higher volatility than
gold, was down 3.4 percent to $29.94, having hit a four-month
low of $29.60 an ounce.
Bullion has now fallen 3 percent in the last three sessions,
partly pressured by uncertainty related to efforts by U.S.
legislators to clinch a deal to avert automatic tax hikes and
spending on Jan. 1.
Gold has failed to benefit as a safe haven even though a
year-end deadline for the "fiscal cliff" looms. On Thursday,
Republicans in the U.S. House of Representatives pushed ahead a
"fiscal cliff" plan that stands no chance of becoming law as
time runs short to reach a deal with President Barack Obama to
avert a Washington-induced economic recession.
After this week's sharp sell-off, bullion is on track to end
the fourth quarter down 7 percent, which would be its worst
quarterly performance since the second quarter of 2004.
OPTIONS, TECHNICAL OUTLOOK BEARISH
Heavy concentration of put options under $1,700 an ounce
added significant pressure on the underlying gold futures. Many
investors have accumulated puts at lower prices to protect their
gains in gold futures.
On charts, Thursday's sell-off sent gold's 14-day relative
strength index to 25, the area which is considered by most
analysts as oversold, for the first time since May.
U.S. COMEX gold futures for February delivery settled
down $21.80 at $1,645.90 an ounce, with volume in line with its
30-day average, preliminary Reuters data showed.
Year to date, gold was up around 5 percent. It was up as
much as 15 percent earlier this year on worries that monetary
easing by the Federal Reserve could spur inflation.
Among platinum group metals, platinum dropped 2.7 to
$1,544.50 an ounce, while palladium slipped 2.1 percent
4:13 PM EST LAST/ NET PCT LOW HIGH CURRENT
SETTLE CHNG CHNG VOL
US Gold FEB 1645.90 -21.80 -1.3 1636.00 1672.80 176,159
US Silver MAR 29.678 -1.438 -4.6 29.635 31.275 74,103
US Plat JAN 1546.20 -46.70 -2.9 1542.00 1595.50 18,544
US Pall MAR 680.25 -18.10 -2.6 672.00 696.50 6,433
Gold 1647.40 -19.16 -1.1 1635.09 1671.51
Silver 29.940 -1.050 -3.4 29.600 31.220
Platinum 1544.50 -42.49 -2.7 1545.50 1592.75
Palladium 676.50 -14.54 -2.1 675.50 693.00
TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG
US Gold 184,570 180,432 174,396 12.98 -0.12
US Silver 87,807 58,723 52,585 22.2 1.55
US Platinum 25,957 10,653 8,902 17.86 -0.55
US Palladium 6,483 6,221 4,737
(Additional reporting by Jan Harvey and David Brough in London;
Editing by James Dalgleish and Bob Burgdorfer)