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PRECIOUS-Gold rallies after worst annual loss in 32 years as equities drop

David Goodman, Dale Hudson and Nick Zieminski)
Thursday, 2 Jan 2014 | 1:41 PM ET

(Adds comment, second byline, dateline, updates prices) NEW YORK/LONDON, Jan 2 (Reuters) - Gold rose 1.5 percent on Thursday as sharp losses in the equity market prompted funds to buy the precious metal on the first trading day of the new year after bullion's worst annual decline in more than 30 years. Silver rallied about 4 percent and platinum group metals also jumped 2 percent in tandem with gold's rally. New positions initiated by institutional investors at the start of the new year and some bargain hunting following the metal drop to a six-month low in the previous session triggered bullion demand, traders said. Analysts said that the inverse correlation between gold and equities could strengthen in 2014 after bullion's tumble and the stock market's strong run last year. "As investors take profits from the equity market after its break-neck pace of growth last year, gold will continue its upward momentum," said Jeffrey Sica, chief investment officer of New Jersey-based Sica Wealth Management, with over $1 billion in client assets. U.S. stocks fell Thursday on the first day of trading in 2014 as investors booked profit in the wake of the S&P 500's best yearly advance since 1997. Gold sank by 28 percent in 2013, ending a 12-year bull run and posting its largest loss in 32 years, as the U.S. Federal Reserve announced plans to unwind its monetary stimulus. Spot gold rose to a two-week high of $1,228.10 an ounce in early trading and was up 1.6 percent at $1,224.69 by 1:07 p.m. EST (1807 GMT). U.S. gold futures for February delivery rose $22.30 to $1,224.60 an ounce in relatively thin trade.

1:07 PM EST LAST/ NET PCT LOW HIGH CURRENT SETTLE CHNG CHNG VOL Gold 1224.69 19.40 1.6 1204.13 1228.10 Silver 20.080 0.750 3.9 19.430 20.200 Platinum 1400.49 29.99 2.2 1374.00 1403.50 Palladium 727.25 16.25 2.3 718.52 729.25 TOTAL MARKET VOLUME 30-D ATM VOLATILITY CURRENT 30D AVG 250D AVG CURRENT CHG US Gold 115,256 130,536 187,542 20.74 -0.73 US Silver 41,481 38,574 57,554 29.69 2.77 US Platinum 9,034 15,352 13,215 17.95 0.32 US Palladium 3,748 3,362 5,861 19.77 -0.93

(Additional reporting by Lewa Pardomuan in Singapore; Editing