* Gold posts biggest one-day percentage drop since 2008
* Bullion drops 4 pct in heavy trade, lowest since Nov
* Technical weakness seen, with support at $1,000/oz
(Recasts, updates prices, market activity to close; changes,
byline, dateline, previously NEW YORK/LONDON)
By Frank Tang
NEW YORK, Feb 4 (Reuters) - Gold posted its biggest one-day
loss since 2008 on Thursday, hitting a three-month low as a
wave of risk aversion swept through global markets, triggering
massive technical selling in the metal.
Bullion tumbled more than 4 percent in heavy trade, briefly
falling below $1,060 an ounce as escalating sovereign debt
fears in Europe prompted investors to bid up the dollar and
unload riskier assets.
Other precious metals also fell. Silver slid nearly 7
percent to its lowest since September, platinum dropped more
than 4 percent and palladium fell 6 percent.
Scott Meyers, senior analyst at Pioneer Futures, a unit of
MF Global, said gold has slid below technical support levels.
"There is not a lot of technical support in gold right now.
It is more of a function of how the market reacts to whatever
stimulus is forcing the market lower right now," Meyers said.
Risk-averse economic sentiment pummeled world stock
markets, pressuring gold, oil and other commodities.
Wall Street fell more than 3 percent on an unexpected
increase in the number of Americans claiming jobless benefits,
and as fiscal worries in euro-zone countries led investors to
buy safe-haven U.S. Treasury debt. []
Spot gold <XAU=> hit a low of $1,059.10 an ounce, the
weakest since Nov. 3. It was last at $1,064.30 an ounce at 4:07
p.m. EST (2107 GMT), sharply lower than $1,108.85 late on
Wednesday.
Spot bullion's 4.2 percent decline was its biggest one-day
percentage loss since Dec. 1, 2008, when it tumbled 5.6
percent, Reuters data showed.
U.S. gold futures for April delivery <GCJ0> settled down
$49 at $1,063 on the COMEX division of the NYMEX.
"If you are short, you stay short, because there is no real
reason to be a buyer unless the market sold off more," said
Rick Bensignor, chief market strategist at broker-dealer
Execution LLC.
The euro plunged to a seven-month low against the dollar.
European Central Bank President Jean-Claude Trichet predicted
many members in the bloc will have large, sharply rising fiscal
imbalances. []
Strength in the U.S. dollar makes dollar-priced commodities
more expensive for holders of other currencies.
Among other commodities, oil prices fell nearly $4 to about
$73 a barrel amid a global sell-off, as Reuters-Jefferies CRB
index <.CRB> also fell 2.5 percent.
TECHNCIALLY VULNERABLE
The sharp decline sent spot gold well below its 14-, 50-
and 100-day moving averages. Technical analysts said gold could
fall further after the sell-off pushed it below major support
levels, but it should hold above $1,000 an ounce.
[]
With U.S. January non-farm payrolls data due Friday, all
eyes will focus on whether the jobs report will rejuvenate gold
through its influence on the dollar.
"This is a broken chart, at least short term. Unless
tomorrow's job numbers somehow change the entire picture on the
dollar and gold turns around, I am in the bear camp here,"
Bensignor said.
The world's largest gold-backed exchange-traded fund, New
York's SPDR Gold Trust <GLD> on Wednesday reported its first
outflow this month. Its holdings declined 1.6 tonnes that day,
after falling 21.7 tonnes in January. []
In other precious metals, silver <XAG=> touched a low of
$15.16, lowest since September, tracking gold's losses, and was
last at $15.26 an ounce against $16.34. Platinum <XPT=> was at
$1,504.50 an ounce versus $1,572.50, and palladium <XPD=> at
$408 versus $434.50.
Close Change Pct 2009 YTD
Chg Close % Chg
US gold <GCJ0> 1063.00 -49 -4.4 1096.20 -3.0
US silver <SIH0> 15.350 -0.967 -5.9 16.845 -8.9
US platinum <PLJ0> 1515.30 -60.90 -3.9 1471.00 3.0
US palladium <PAH0> 408.40 -28.40 -6.5 408.85 -0.1
Prices at 4:13 p.m. EST (2113 GMT)
Gold <XAU=> 1064.15 -44.70 -4.0 1096.35 -2.9
Silver <XAG=> 15.25 -1.09 -6.7 16.84 -9.4
Platinum <XPT=> 1504.50 -68.00 -4.3 1465.50 2.7
Palladium <XPD=> 407.50 -27.000 -6.2 405.50 0.5
Gold Fix <XAUFIX=> 1083.25 -19.25 -1.7 1104 -1.9
Silver Fix <XAGFIX=> 16.13 -66.00 -3.9 16.99 -5.1
Platinum Fix <XPTFIX=> 1549.00 1.00 0.1 1466 5.7
Palladium Fix<XPDFIX=> 431.00 1.00 0.2 402 7.2
(Additional reporting by Jan Harvey in London; Editing by
David Gregorio)
