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PRECIOUS-Gold rises from 4-month low on options-related buying

Frank Tang and Clara Denina
Monday, 25 Nov 2013 | 4:10 PM ET

* Bullion reverses losses after brief futures trading pause

* Gold investors shrug off U.S. economic data

* SPDR posts biggest outflow in 3 weeks

* Coming up: US housing starts, consumer confidence Tuesday

(Adds trader comment, updates market activity) NEW YORK/LONDON, Nov 25 (Reuters) - Gold prices rose on Monday, reversing early losses in a late-session rally, as options-related demand and short-covering offset a weaker crude oil market following a deal on Iran's nuclear program. Buying related to Monday's Comex December option expiration and the December-February contract rollover underpinned gold prices, said George Gero, vice president of RBC Capital Markets. Spot gold was up 0.5 percent at $1,249.64 by 3:32 p.m. EST (2032 GMT), having earlier fallen to its lowest level since July 8 at $1,227.34 an ounce. Early in the day, bullion prices fell 1 percent to a four-month low after a weekend agreement that halts Iran's most sensitive nuclear activity. The deal suspends some sanctions by the United States and the European Union on several sectors of Iran's economy for an initial six-month period. U.S. Comex gold futures trading was halted for 20 seconds at 1:02 a.m. by CME Group's Stop Logic mechanism to prevent excessive price movements. In the 10 minutes around the trading pause, gold prices slid more than $11 on a higher-than-average volume of 5,400 lots. Gold futures for December delivery settled up $2.90 at $1,241.20 an ounce. Trading volume was 60 percent above its 30-day average, largely boosted by the December-February contract rollover ahead of the December contract's first-notice day on Friday, preliminary Reuters data showed. Mixed U.S. economic reports had little effect on gold prices. Data showed contracts to buy previously owned U.S. homes hit a 10-month low in October, but a strong rebound in services sector activity early this month suggested some resilience in the economy. "The problem for gold investors is that the horizon now is so flat in terms of that negative shock from either inflation or deflation," said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co. "There is just a lack of rationale to stay invested in gold." A partial recovery in the crude oil market, which had fallen 3 percent earlier in the session, lifted the market off its lows, traders said. Brent crude futures ended down 0.1 percent. Gold is usually seen as a hedge against oil-led inflation.

ETF OUTFLOWS, TAPER FEARS WEIGH Bullion was still weighed down by fears of an early end to U.S. stimulus measures and by the biggest drop in three weeks in the holdings of the largest bullion-backed exchange-traded fund. Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund and the best measure of investor sentiment, fell 4.50 tonnes to 852.21 tonnes on Friday, the lowest since February 2009. That was the sharpest drop since Nov. 1. Silver was up 0.7 percent at $20 an ounce, having touched its lowest since mid-August at $19.54 earlier. Platinum edged up 0.2 percent to $1,380.99 an ounce, while palladium rose 0.6 percent to $718.47 an ounce.

3:32 PM EST LAST/ NET PCT LOW HIGH CURRENT SETTLE CHNG CHNG VOL US Gold DEC 1241.20 -2.90 -0.2 1225.70 1254.00 177,436 US Silver DEC 19.882 0.020 0.1 19.570 20.100 55,282 US Plat JAN 1377.80 -4.90 -0.4 1374.20 1389.50 9,190 US Pall DEC 719.90 5.85 0.8 708.95 725.05 5,120 Gold 1249.64 6.65 0.5 1228.38 1252.50 Silver 20.000 0.140 0.7 19.540 20.070 Platinum 1380.99 3.19 0.2 1377.25 1388.00 Palladium 718.47 6.11 0.9 712.52 720.97 TOTAL MARKET VOLUME 30-D ATM VOLATILITY CURRENT 30D AVG 250D AVG CURRENT CHG US Gold 242,830 153,898 158,890 19.99 0.12 US Silver 84,326 51,410 54,387 24.99 -1.28 US Platinum 9,379 9,465 12,987 16.55 -1.43 US Palladium 9,004 7,538 5,829 19.76 -2.64

(Additional reporting by A. Ananthalakshmi in Singapore; editing by Jane Baird, Anthony Barker, David Evans, David Gregorio and Peter Galloway)