* Bullion prices retreat after three days of record highs
* Gold investors sell on worries ahead of Fed meeting
* Palladium falls 2 pct on ETF outflow, speculation
(Recasts, updates prices, market activity; new byline,
dateline, previously LONDON)
By Frank Tang
NEW YORK, Sept 21 (Reuters) - Gold dropped on Tuesday after
hitting record highs for three consecutive days, as a report
showing sign of stability in the U.S. housing market prompted
bullion investors to take profits.
Traders said the gold market was nervous ahead of the
Federal Reserve's policy meeting which concludes on Tuesday.
The dollar also slipped, with some in the currency market
cautious about the Fed meeting. []
Tom Pawlicki, precious metals and energy analyst at futures
broker MF Global, said gold could fall if the Fed stayed away
from commenting on new measures to spur the economy.
"I don't see why the Fed would have any need to undertake
any additional quantitative easing. So, if that's the case, it
may offer pressure to gold," Pawlicki said.
Spot gold <XAU=> had dropped to $1,273.95 an ounce at 12:04
p.m. EDT (1604 GMT), from $1,279.25 late on Monday. U.S. gold
futures for December delivery <GCZ0> fell $5.20 to $1,275.60.
Groundbreaking for new U.S. homes jumped in August to a
four-month high, government data showed. The increase, which
was more than expected, diminished safe-haven demand for gold
as it hinted at housing market stability after steep declines
brought by the end of a homebuyer tax credit. []
Analysts said gold could be in for a correction if the Fed
does not signal an intent to stimulate the U.S. economy with
new purchases of government debt, a plan known as quantitative
easing.
Most economists do not expect any new economic stimulus
programs from the Fed, But if the economic recovery falters,
the U.S. central bank may opt later this year for another round
of quantitative easing. This could increase gold's appeal.
The possibility of Fed stimulus has kept many traders
bullish about gold, which remained sharply below its
inflation-adjusted all-time high above $2,200 an ounce.
(Graphic: http://link.reuters.com/gup24p)
Any further round of quantitative easing would reflect
concern over the outlook for U.S. growth. Interest rates
probably would also remain lower longer, which could undermine
the U.S. dollar, and ultimately prove inflationary.
A weaker dollar often boosts gold. Although that inverse
relation has been shaky this year, the correlation has
strengthened in the last five days to a negative 0.5.
MAJOR GOLD ETF HOLDINGS RISE
Investment demand for gold remained healthy, with holdings
of the world's largest gold-backed exchange-traded fund, New
York's SPDR Gold Trust <GLD>, rising another 3.65 tonnes on
Monday to 1,304.472 tonnes. []
CME Group Inc, the biggest U.S. operator of futures
exchanges, will offer contracts tied to anticipated price
swings in gold and oil starting in the fourth quarter.
World Gold Council country manager Cihan Goksel told a WGC
meeting in Istanbul on Tuesday that global gold demand rose 36
percent in the second quarter to 1,050 tonnes. []
This has lent considerable support to gold. A debate at the
Denver Gold Forum on Monday found few delegates at the
conference expect prices to fall imminently. []
Among other precious metals, platinum was on track to snap
a six-day winning streak, while palladium's 2 percent decline
led all precious metals.
PGM traders were focused on official Chinese customs
figures, which showed that platinum import dropped 18 percent
in August, and palladium was up less than 1 percent.
[]
ETFS Physical Palladium Shares <PALL.P>, a U.S.-based
palladium exchange-traded product operated by ETF Securities
saw an outflow of nearly 20,000 ounces on Monday, the largest
dip in its holdings since late July, its website showed.
Some PGM investors took profits after palladium's 30
percent year-to-date rise, compared with gold's 16 percent gain
over the same period.
Palladium <XPD=> lost 1.9 percent to $525.35 versus
$535.40, and platinum <XPT=> stood at $1,613 an ounce against
$1,625.75.
Silver <XAG=> eased to $20.61 from $20.73 an ounce, after
hitting a 2-1/2 year high of $20.99 on Friday.
Prices at 12:32 p.m. EDT (1632 GMT)
LAST NET PCT YTD
CHG CHG CHG
US gold <GCZ0> 1276.00 -4.80 -0.4% 16.4%
US silver <SIZ0> 20.620 -0.183 -0.9% 22.4%
US platinum <PLV0> 1616.00 -16.00 -1.0% 9.9%
US palladium <PAZ0> 529.00 -12.85 -2.4% 29.4%
Gold <XAU=> 1274.30 -4.95 -0.4% 16.2%
Silver <XAG=> 20.58 -0.15 -0.7% 22.2%
Platinum <XPT=> 1613.00 -12.75 -0.8% 10.1%
Palladium <XPD=> 526.00 -9.40 -1.8% 29.7%
Gold Fix <XAUFIX=> 1275.00 -3.75 -0.3% 15.5%
Silver Fix <XAGFIX=> 20.76 -15.00 -0.7% 22.2%
Platinum Fix <XPTFIX=> 1615.00 1.00 0.1% 10.2%
Palladium Fix <XPDFIX=> 530.00 4.00 0.7% 31.8%
(Additional reporting by Jan Harvey in London; Editing by
David Gregorio)
