PRECIOUS-Gold drops 2.6 pct as strong US data fuels fund sales
* Gold posts biggest one-day drop since Oct. 1
* Euro-priced gold falls to lowest since August 2010
* Strong trading of Comex Jan. $1,275 calls indicate upside
* Coming up: US Dec auto sales data
(Adds analyst comments, new milestones, updates market activity) NEW YORK/LONDON, Dec 2 (Reuters) - Gold prices tumbled 2.6 percent on Monday to their lowest since early July, as better-than-expected U.S. manufacturing data prompted funds and speculators to increase bearish bets on bullion, traders said. The precious metal's drop marked a sharp contrast to other asset classes. U.S. equities stayed largely flat and U.S. Treasuries prices fell 0.5 percent, while the dollar index climbed 0.3 percent. Bullion's losses widened after data showed the U.S. manufacturing sector expanded last month at its fastest pace in 2-1/2 years, while hiring also accelerated. "A lot of momentum-driven and institutional investors are piling on gold's decline by short selling it," said Jeffrey Sica, chief investment officer at Sica Wealth Management with over $1 billion in client assets. Spot gold fell 2.6 percent to $1,219.20 by 3:13 p.m. EST (1955 GMT), its biggest one-day drop since Oct. 1. The metal ended November down 5.4 percent, its biggest monthly decline since June and its third consecutive month of losses. U.S. Comex gold futures for February delivery settled down $28.20 at $1,222.30 an ounce. Despite the high turnover, trading volume was about 20 percent below its 30-day average, preliminary Reuters data showed. Albert Ng, a market maker and portfolio manager at Aurum Options Strategies, said that there was heavier-than-usual trading of Comex January $1,275 call options, indicating that some participants were betting on a rebound in December. Gold priced in euro terms also fell to its lowest since August 2010 at 898.91 euros, reflecting a resurgent U.S. dollar based on an overall improvement in the U.S. economic outlook.
FED TAPERING FEARS Gold investors are now focusing on the next Fed policy meeting on Dec. 17-18, when it could decide the fate of its stimulus. "The combination of a possible Fed 'tapering' of the asset purchase program and more moderate physical demand, most notably from China" could trigger further declines in gold, said James Steel, analyst at HSBC. Among other metals, silver fell 4.2 percent to $19.12 an ounce, having earlier hit a near five-month low of $19.11. The metal posted an 8.6 percent monthly fall in November, the biggest monthly decline since June. U.S. Mint sales of American Eagle silver coins in November fell 27 percent year-on-year, as a sharp drop in silver prices and worries over the Federal Reserve's trimming its bond-buying stimulus prompted investors to buy less. Platinum was down 1.5 percent to $1,336.25 an ounce, and palladium fell 1.4 percent to $708.72 an ounce.
3:13 PM EST LAST/ NET PCT LOW HIGH CURRENT SETTLE CHNG CHNG VOL US Gold FEB 1221.90 -28.50 -2.3 1217.10 1251.20 133,756 US Silver MAR 19.289 -0.744 -3.7 19.160 20.010 42,775 US Plat JAN 1346.80 -22.00 -1.6 1335.50 1369.80 9,365 US Pall MAR 713.40 -6.25 -0.9 710.20 720.00 3,316 Gold 1219.20 -32.79 -2.6 1218.43 1251.04 Silver 19.120 -0.830 -4.2 19.170 19.940 Platinum 1336.25 -20.95 -1.5 1343.75 1367.75 Palladium 708.72 -9.78 -1.4 713.75 717.00 TOTAL MARKET VOLUME 30-D ATM VOLATILITY CURRENT 30D AVG 250D AVG CURRENT CHG US Gold 145,190 174,564 188,091 19.78 0.83 US Silver 46,036 59,845 57,545 25.04 -0.58 US Platinum 10,868 9,465 12,889 15.57 -0.60 US Palladium 3,490 8,475 5,959 20.02 -0.40
(Editing by Keiron Henderson, Jane Baird, David Gregorio and Meredith Mazzilli)