PRECIOUS-Gold hits near 3-year low, safe-haven appeal dims
* Gold, silver prices hit lowest since August 2010
* Biggest physical gold fund sees strongest outflow in 2 mths
* Indian buying curbed by strong rupee, government policy
(New updates throughout, adds market details, second byline, NEW YORK dateline) NEW YORK/LONDON, June 26 (Reuters) - Gold fell to a near three-year low on Wednesday, tumbling nearly 4 percent as a rally in the equity markets further weighed down on bullion's investment appeal as a hedge against economic uncertainty. Silver dropped almost 5 percent and platinum group metals also declined sharply. Bullion was pummelled despite some easing fears that the U.S. Federal Reserve would begin to withdraw its stimulus early after the U.S. government slashed its estimate for first-quarter economic growth. "We bought gold for two reasons - because we were worried about the inflationary impact of policy and because we thought the financial system was going to fall apart," said Sean Corrigan, chief investment strategist at Diapason Commodities Management. "Although it may be completely the wrong judgement, the market has decided that none of those at the moment is a concern," Corrigan said. Spot gold earlier slumped to its lowest since August 2010 at $1,223.54 an ounce. It was last down 3.6 percent at $1,230.31 an ounce by 1:17 p.m. EDT (1717 GMT). Bullion has now lost $120 in the last four sessions after the Fed last week gave its most explicit signal yet it plans to wind down the era of easy money. U.S. gold futures for August delivery dropped $45.10 to $1,230, with trading volume approaching 300,000 lots versus its 30-day average at 211,000, preliminary Reuters data showed. The metal has lost more than a quarter of its value this year and by around 23 percent in the second quarter, its biggest quarterly loss since Reuters began tracking gold prices in 1968.
U.S. stocks advanced for a second straight day on hopes that the worse-than-expected U.S. GDP data might delay the Fed in scaling back its stimulus, a key factor behind gold's rally in recent years. "Equities are up again. People want risk-on and gold is therefore seen as a source of cash and not as a safe haven, because that's not needed," said Simon Weeks, head of precious metals at the Bank of Nova Scotia Silver fell to its lowest since August 2010 at $18.39 an ounce. Spot prices were later down 4.5 percent at $18.71 an ounce.
ETF OUTFLOW, ASIA DEMAND EYED The world's largest gold-backed exchange-traded fund the SPDR Gold Shares, reported the biggest one-day drop in its holdings in more than two months at 16.23 tonnes on Tuesday. That brought the fund's total outflow for the year to 381 tonnes. Further weighing on gold was news demand in the No. 1 consumer India is likely to fall this quarter as the government moves to curb gold imports. Worries about a liquidity crunch in China also pressured physical gold demand, analysts said. Among platinum group metals, platinum was down 3.5 percent at 1,302.74 an ounce, while palladium slid 4.7 percent to $631.72 an ounce. Prices at 1:17 p.m. EDT (1717 GMT)
LAST NET PCT YTD CHG CHG CHG US gold 1230.00 -45.10 -3.5% -26.6% US silver 18.710 -0.008 -4.3% -38.1% US platinum 1305.30 -45.20 -3.4% -15.2% US palladium 633.60 -35.20 -5.3% -9.9% Gold 1230.31 -46.43 -3.6% -26.5% Silver 18.71 -0.87 -4.4% -38.3% Platinum 1302.74 -47.26 -3.5% -15.3% Palladium 631.72 -31.02 -4.7% -10.0% Gold Fix 1236.25 7.25 0.6% -25.7% Silver Fix 18.67 -110.00 -5.6% -37.7% Platinum Fix 1329.00 6.00 0.5% -12.7% Palladium Fix 652.00 3.00 0.5% -6.7%
(Additional reporting by Veronica Brown in London; Editing by Marguerita Choy)