PRECIOUS-Gold drops to 3-week low after ECB rate cut, US GDP

2:19 p.m. EST (1959 GMT), having earlier hit $1,298.31, the
Thursday, 7 Nov 2013 | 3:11 PM ET

* U.S. second-quarter growth data beats expectations

* European Central Bank cuts interest rates to record low

* SPDR Gold Trust posts rare inflow

* Coming up: U.S. October nonfarm payrolls Friday

(Adds trader comment, second byline, dateline, updates market activity) NEW YORK/LONDON, Nov 7 (Reuters) - Gold fell to a three-week low on Thursday, reversing early gains end down nearly 1 percent, hit by signs of strong U.S. economic growth, and as the European Central Bank cut interest rates to a record low. The precious metal initially rose after the ECB cut interest rates to a record low on Thursday and said it could take them lower still to prevent the euro zone's recovery from stalling as inflation tumbles. Bullion later came under pressure after U.S government data showed economic growth accelerated in the third quarter as businesses restocked shelves. However, the slowest expansion in consumer spending in two years suggested an underlying loss of momentum. A recent strong run of the equities market on a better economic outlook also sapped momentum in gold, a traditional safe haven, analysts said. U.S. stocks measured by the S&P 500 index fell on Thursday but stayed within striking distance to a record high set last week. "When the stocks are rallying, investors have little reasons to head to safe havens and physical assets like gold, as they can go into the stock market and do well there," said Thomas Capalbo, a precious metals broker at New York futures brokerage Newedge. Spot gold was down 0.9 percent at $1,305.71 an ounce lowest since Oct 17. U.S. gold futures for December delivery settled down $9.30 at $1,308.50, with trading volume about 10 percent above its 250-day average, preliminary Reuters data showed, reversing a recent trend of weak turnover. Gold prices have fallen 20 percent this year on expectations that the Federal Reserve would taper its economic stimulus program. Analysts say Friday's U.S. jobs report for October may provide the most telling insight into the impact of a government shutdown last month that may provoke an extended continuation of Fed bond-buying.

GOLD ETF HOLDINGS UP Gold investment interest firmed on Wednesday, with holdings of the SPDR Gold Trust, the largest gold-backed ETF, rising 2.1 tonnes to 868.42 tonnes - the first increase since Oct. 22. The fund, whose purchases of gold are a reflection of a rising investor interest in the metal, has seen over 450 tonnes in outflows this year, driving holdings to their lowest since early 2009. Among other precious metals, silver was down 1.1 percent at $21.55 an ounce. Platinum fell 0.8 percent to $1,450.49 an ounce, and palladium dropped 0.6 percent to $757.22 an ounce.

2:19 PM EDT LAST/ NET PCT LOW HIGH CURRENT SETTLE CHNG CHNG VOL US Gold DEC 1308.50 -9.30 -0.7 1296.00 1326.00 175,751 US Silver DEC 21.657 -0.111 -0.5 21.375 22.015 52,310 US Plat JAN 1456.80 -10.60 -0.7 1453.50 1473.60 9,082 US Pall DEC 759.15 -5.20 -0.7 753.05 765.00 5,794 Gold 1305.71 -12.08 -0.9 1298.31 1325.31 Silver 21.550 -0.230 -1.1 21.410 21.970 Platinum 1450.49 -11.50 -0.8 1455.00 1469.00 Palladium 757.22 -4.61 -0.6 755.77 762.25 TOTAL MARKET VOLUME 30-D ATM VOLATILITY CURRENT 250D AVG CURRENT CHG US Gold 209,470 189,283 23.18 -1.01 US Silver 68,620 58,610 35.14 1.70 US Platinum 9,212 12,978 20.36 0.00 US Palladium 6,456 5,806

(Additional reporting by Clara Denina; Editing by William Hardy and Andrew Hay)