Gold price snaps 3-day winning streak, drops 1%
Gold Tuesday's losses reversed the previous session's climb to a one-month high, when a 1 percent loss in U.S. equities triggered safe-haven buying.
New York/London: Gold fell nearly 1 percent on Tuesday, snapping a three-day winning streak, as a rally in U.S. equities that was sparked by encouraging December retail sales data dampened buying sentiment among bullion investors.
The S&P 500 index was up 1 percent after the U.S. Commerce Department said core retail spending posted a big jump, a sign the economy was gathering steam at the end of last year and was poised for stronger growth in 2014.
Early in the session, gold rose to near a one-month high on strong physical demand from Chinese investors, traders said.
Analysts said gold`s 3 percent gain early in 2014 was supported by a drop in equities. Gold prices tumbled 28 percent last year, when there was a record runup in stocks.
"There is definitely negative correlation between gold and equities. As of right now, it looks like it is going to continue," said Adam Sarhan, chief executive of New York-based Sarhan Capital.
Spot gold was down 0.8 percent at $1,242.66 an ounce at 3:05 PM EST (2005 GMT).
U.S. COMEX gold futures for February delivery settled down USD 5.70 at USD 1,245.40 an ounce, with trading volume about 10 percent below the 250-day average, preliminary Reuters data showed.
Tuesday`s losses reversed the previous session`s climb to a one-month high, when a 1 percent loss in U.S. equities triggered safe-haven buying.
In the three sessions before Tuesday, gold had gained more than 3 percent, helped by Friday`s U.S. nonfarm payrolls data. The data showed disappointing jobs growth and prompted speculation the U.S. Federal Reserve would proceed cautiously in scaling back its stimulus program.
The big drop in gold prices last year ended a 12-year bull run.
But a slow start in some stock markets this year has boosted gold prices, usually seen as a hedge against rising prices and as an alternative investment to equities.
In China, the biggest physical market for gold, demand has picked up since the beginning of the month in the buildup to the Lunar New Year, when the metal is bought for good fortune and given as gifts.
The U.S. Mint said it sold 3,180,500 ounces of 2014 American Eagle silver investment coins on Monday, the first day of sale for such coins, representing nearly 90 percent of the Mint`s weekly allocation limit of 3,575,000 ounces.
Silver dropped 1.1 percent to USD 20.12 an ounce. Platinum was down 1.2 percent to USD 1,422.70 an ounce, while palladium eased 0.4 percent at USD 734.22 an ounce.