PRECIOUS-Gold lower after strong US jobs data; platinum falls

Frank Tang and Clara Denina
Wednesday, 27 Nov 2013 | 2:46 PM ET

* Drop in US jobless claims stirs ideas of Fed tapering

* Platinum hits four-month low on technical selling

* China's imports from Hong Kong highest in seven months

* Coming up: U.S. markets shut on Thursday

NEW YORK/LONDON, Nov 27 (Reuters) - Gold fell on Wednesday, erasing initial gains, as a drop in U.S. jobless claims supported expectations the Federal Reserve will soon scale back its monetary stimulus, traders said. Platinum dropped about 1.5 percent to a four-month low, underperforming other precious metals, on pressure from technical selling that developed when prices fell below support at $1,350 an ounce. Bullion prices were down for a second consecutive day after the unexpected drop in last week's U.S. jobless claims. However, a separate report showed continued weakness in business spending on capital goods. As a gauge of gold interest among funds and institutional investors, holdings in gold-backed exchange-traded funds fell on Tuesday, extending a trend of heavy outflows. "Negative sentiment and weak physical demand trends indicate further weakness in gold prices may continue in the months ahead," said Robert Haworth, senior investment strategist at the Private Client Reserve at U.S. Bank Wealth Management. Gold investors digested news that Venezuela is evaluating a swap agreement involving gold reserves as a way to fortify dollar supplies in the OPEC nation, a senior government source told Reuters on Wednesday. Spot gold was down 0.3 percent at $1,239 an ounce by 1:57 p.m. EST (1857 GMT), after rising nearly 1 percent earlier in the day. U.S. gold futures settled down $3.60 at $1,237.80 an ounce. Trading volume was at 220,000 lots, preliminary Reuters data showed, nearly 35 percent above its 30-day average of 165,000 lots. Strong turnover was largely boosted by the December-February contract roll over ahead of the December contract's first-notice day on Friday, traders said. With U.S. markets shut on Thursday for the Thanksgiving holiday, market activity is expected to slow and not pick up until next week, traders said.

CHINESE DEMAND Losses in the gold market were limited after data showed China's net gold imports from Hong Kong hit the highest in seven months in October. Chow Tai Fook Jewellery Group, the world's largest jewellery retailer by market value, posted a 92 percent rise in net profit for the six months ended in September.

Platinum fell 1.3 percent to $1,350.99 an ounce, having earlier hit a four-month low of $1,347.25. "Platinum was down due to a steady downtrend in commodities because of deflation worries and a lot of technical support being breached," said Adam Sarhan, chief executive of Sarhan Capital. Silver dropped 1 percent to $19.64 an ounce, and palladium eased 0.3 percent to $713.72 an ounce.

1:57 PM EST LAST/ NET PCT LOW HIGH CURRENT SETTLE CHNG CHNG VOL US Gold JAN 1237.80 -3.60 -0.3 1237.20 1253.20 438 US Silver MAR 19.682 -0.211 -1.1 19.665 20.140 41,024 US Plat JAN 1352.70 -19.20 -1.4 1351.80 1385.30 10,412 US Pall MAR 715.95 -2.50 -0.3 715.50 726.30 4,615 Gold 1239.00 -3.90 -0.3 1238.33 1254.20 Silver 19.640 -0.190 -1.0 19.650 20.100 Platinum 1350.99 -17.11 -1.3 1355.75 1382.75 Palladium 713.72 -2.25 -0.3 717.75 723.25 TOTAL MARKET VOLUME 30-D ATM VOLATILITY CURRENT 30D AVG 250D AVG CURRENT CHG US Gold 220,952 164,655 187,471 19 -0.17 US Silver 67,199 56,389 57,404 24.6 -1.72 US Platinum 10,805 9,465 12,889 16.15 -0.62 US Palladium 7,386 8,099 5,934 20.42 -0.40