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PRECIOUS-Gold down more than 1 pct on Fed jitters, equities gain
June 18, 2013 / 7:33 PM / in 4 years

PRECIOUS-Gold down more than 1 pct on Fed jitters, equities gain

* Uncertainty about Fed meeting weighs on gold
    * Short-covering possible if Fed stays put with stimulus
    * Demand still soft in India, China -traders
    * Coming up: U.S. Fed Open Market Committee statement
Wednesday

 (Adds market details, updates prices)
    By Frank Tang and Jan Harvey
    NEW YORK/LONDON, June 18 (Reuters) - Gold fell more than 1
percent on Tuesday as U.S. equities rallied and bullion buyers
took to the sidelines before the conclusion of a two-day Federal
Reserve policy meeting they hope will give greater clarity on
the outlook for U.S. monetary policy.
    The metal fell for a second consecutive day - the first time
in nearly a month - as its safe-haven appeal was reduced by the
rise of U.S. equities on hopes that the Fed will maintain its
current level of stimulus at the end of its Federal Open Market
Committee meeting on Wednesday. 
    Traders are trying to anticipate the Fed's timetable for
winding down purchases of $85 billion per month of bonds, a
program known as quantitative easing. 
    Gold, a traditional inflation hedge, has been under pressure
after top Fed policymakers said last month the central bank
could scale back its stimulus measures.
    The precious metal could, however, stage a short-covering
rally after the conclusion of the meeting, analysts said.
    "Should the FOMC not come any closer to giving greater
clarification on the asset-buying program, then the gold market
could rally and investors who have been shorting gold in
anticipation of a Fed move away from QE may have to cover," said
James Steel, chief precious metals analyst at HSBC.
    "This could prompt a challenge of the $1,400 an ounce
level," Steel said.
    Spot gold was down 1.3 percent at $1,366.60 an ounce
at 3:15 p.m. EDT (1915 GMT), having earlier hit a near one-month
low of $1,360.54. 
    U.S. Comex gold futures for August delivery settled
down $16.20 an ounce at $1,366.90, with trading volume at around
half of its 30-day daily average, preliminary Reuters data
showed.
    On Tuesday, U.S. inflation showed signs of stabilizing in
May after a long decline, government data showed, a potential
comfort to Federal Reserve policymakers who want to avoid any
chance of a debilitating bout of deflation. The S&P 500 index
 gained nearly 1 pct. 
    Concerns that U.S. monetary policy may be reined in have
helped knock gold prices 18 percent lower this year. 
    Silver fell 0.8 percent to $21.65 an ounce.
    The CME Group's smaller silver contract, the physically
delivered 1,000-ounce silver futures, logged total volume of 30
lots on its second day of trading on Tuesday, according to CME's
website. (Link: link.reuters.com/myt88t)
    Turnover of the benchmark 5,000-ounce Comex silver futures
was around 58,000 lots, below its 30-day average at 55,000,
preliminary Reuters data showed.
    
    INDIAN, CHINESE BUYERS HOLD OFF
    Physical demand retreated in India and China, the top two
consumers of bullion, from peak levels reached after a steep
sell-off in April.
    A Hong Kong precious metals trader said premiums there had
fallen to $2 an ounce over London spot prices, from a high of $6
last month. Hong Kong sells mainly to buyers in China.
    Any signs of a significant slowdown in the Chinese market
would be a big blow to bullion prices because investors expect
China to offset slower buying from India.
    Demand in India has eased since the government increased the
import duty on bullion by a third in an effort to reduce its
current account deficit. 
    Among other precious metals, platinum gained 0.7
percent to $1,439.99 an ounce and palladium fell 0.7
percent to $707.43 an ounce.
 3:15 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold AUG   1366.90 -16.20  -1.2  1360.20 1385.40  119,282
 US Silver JUL  21.677 -0.081  -0.4   21.445  21.890   40,635
 US Plat JUL   1440.10   5.30   0.4  1425.10 1446.10   12,602
 US Pall SEP    708.35  -9.50  -1.3   697.10  716.90    4,035
                                                              
 Gold          1366.60 -17.75  -1.3  1361.45 1385.55         
 Silver         21.650 -0.180  -0.8   21.550  21.940
 Platinum      1439.99   9.99   0.7  1428.25 1440.75
 Palladium      707.43  -5.07  -0.7   699.77  713.25
                                                              
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        122,773   213,568   181,124        22    1.03
 US Silver       58,794    54,592    56,491     30.45    0.40
 US Platinum     16,419    12,780    11,703      23.1    0.51
 US Palladium     4,113     6,371     5,583                  
                                                              
 
 (Additional reporting by A. Ananthalakshmi in Singapore;
Editing by David Goodman, Jane Baird, Peter Galloway and Chizu
Nomiyama)

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