January 6, 2014 / 11:32 AM / 4 years ago

PRECIOUS-Gold shakes off early tumble and rises as shares ease

* Gold holds gains after sudden dive early in session
    * CME says all trades stand, market functions properly
    * Weak equities lift gold -analysts
    * Coming up: U.S. international trade data Tuesday

 (Adds bullets, market details, updates prices)
    By Frank Tang and Clara Denina 
    NEW YORK/LONDON, Jan 6 (Reuters) - Gold prices rose on
Monday, shaking off an unusual and sudden tumble earlier in the
session, with weakness on Wall Street extending bullion's rally
to a third consecutive session.
    The benchmark S&P 500 stock index eased after data
showed the pace of growth in the U.S. services sector slowed in
December for a second straight month, while new orders for
factory goods rebounded in November. A weaker dollar also helped
boost gold.  
    Analysts said gold appeared to find support from equities'
losses at the beginning of 2014 following last year's tumble in
bullion prices and stock markets' record runup.
    "It could very well be funds reconfiguring where they stand
in terms of gold positions after cutting them last year," said
Thomas Capalbo, a precious metals trader at Newedge, a brokerage
in New York.
    Spot gold was trading up 0.3 percent at $1,239.39 an
ounce at 3:20 p.m. EST (2020 GMT), having earlier hit a one-week
high of $1,248.30.
    The yellow metal has now rallied 3 percent since the start
of the year following its 28 percent loss in 2013, which was its
worst annual performance since 1982.
    U.S. gold futures for February delivery settled down
60 cents at $1,238 an ounce, trading in a choppy $35 range
between $1,247.70 and $1,212.60.
    Total trading volume was about 160,000 lots, about 20
percent below the 250-day average, preliminary Reuters data
showed.
    Unusually heavy trade volumes early in the New York session
rattled U.S. gold futures, triggering a brief halt while
temporarily sending bullion prices down by more than $30 an
ounce, or about 3 percent, between 10:14 a.m. and 10:15 a.m.
EST.
    It was not immediately clear what sparked the volatility,
which prompted gold traders to speculate the move was a result
of a so-called fat-finger erroneous trade. 
    CME Group said "all trades stand and our technology
performed as designed".
    Frank McGhee, head precious metals dealer at Chicago
commodities brokerage Alliance Financial LLC, said some gold
traders stood ready to sell after the unusual slide dented
buying sentiment.
    Traders will now focus on U.S. nonfarm payrolls and trade
numbers on Friday for clues on the strength of the economic
recovery. 
    Ben Bernanke, who steps down as head of the Fed at the end
of January, gave an upbeat assessment on Friday of the U.S.
economy in coming quarters, though he did temper the good news
in housing, finance and fiscal policies by repeating that the
overall recovery "clearly remains incomplete". 
    Among other precious metals, silver was up 0.1
percent at $20.15 an ounce. Platinum rose 0.3 percent to
$1,413, while palladium climbed 1.3 percent to $734.25.
 3:20 PM EST     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold FEB   1238.00  -0.60   0.0  1212.60 1247.70  142,264
 US Silver MAR  20.103 -0.108  -0.5   19.950  20.355   37,249
 US Plat APR   1416.40   2.20   0.2  1390.10 1423.80   11,437
 US Pall MAR    738.50   7.30   1.0   726.95  739.00    3,447
                                                               
 Gold          1239.39   3.23   0.3  1233.48 1248.30         
 Silver         20.150  0.030   0.1   19.970  20.330
 Platinum      1413.00   4.26   0.3  1399.50 1420.75
 Palladium      734.25   9.50   1.3   728.75  735.97
                                                               
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        156,848   130,385   187,082     19.99    0.05
 US Silver       38,127    38,824    57,444      26.3   -1.17
 US Platinum     11,551    14,890    13,142     18.76   -0.01
 US Palladium     3,544     3,298     5,863     19.61   -0.16
                                                               
   

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

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