PRECIOUS-Gold drops 2.5 pct in commods rout, fear subsides

                                
 * Gold, silver tumble as fear trade takes backseat
                                
 * Commodities sharply down as dollar turns higher
                                
 * Coming up: minutes of Fed Dec. 14 meeting, 1900 GMT
 (Recasts, adds comments, updates market activity, changes
byline/dateline, previously LONDON)
                                
 By Frank Tang
                                
 NEW YORK, Jan 4 (Reuters) - Gold dived more than 2 percent
on Tuesday, its biggest one-day loss since early November, as
signs of an improving economic outlook diminished safe-haven
buying and a profit-taking commodities rout dragged prices off
highs.
                                
 Silver fell nearly 4 percent and platinum group metals also
dropped sharply as investors unwound solid gains made on thin
volume over the holidays, when silver hit a series of 30-year
highs and palladium touched a near 10-year peak. Gold had come
within $10 of a new all-time high on Monday.
                                
 "I think this is more of a healthy correction. The fear
trade is backing off somewhat" after gold has recently rallied
on global economic anxiety," said Mark Luschini, chief
investment strategist of Janney Montgomery Scott, a financial
services firm managing $50 billion client assets.
                                
 "Data in the last couple of days only continues to affirm
the organic strengthening in the economy, and that's not just
only in the U.S. but in the euro zone as well," he said.
                                
 Global purchasing managers' indexes on Monday showed that
manufacturing growth quickened, while on Tuesday, a government
report showed new orders received by U.S. factories
unexpectedly rose in November, and orders excluding
transportation recorded their largest gain in eight months.
[ID:nN04219375]
                                
 Spot gold <XAU=> fell 2.6 percent to $1,377.80 an ounce at
12:46 p.m. EST (1746 GMT), falling from Monday's intra-day peak
of $1,423.57 an ounce. U.S. gold futures for February delivery
<GCG1> lost $44.2 an ounce to $1,378.70.
                                
 The Reuters-Jefferies CRB index <.CRB> dropped 2 percent in
its sharpest one-day fall since mid-November, with investors
singling out commodities as having risen too far, too fast
during the holiday period. Wall Street dropped less than 1
percent after Monday's rally. [.N] [.EU]
                                
 A BACK SEAT
                                
 "Maybe gold will take a bit of a back seat from a
performance point of view for the next month or so," Macquarie
analyst Hayden Atkins said.
                                
 Spot silver <XAG=>, which has outperformed gold since
September, fell 4.2 percent to $29.37 an ounce, retreating from
the previous session's peak of $31.22, its highest since 1980.
                                
 U.S. gold and silver futures volume was noticeably higher
than recent weeks as traders returned after the holiday.
                                
 A rebound in the dollar added to the pressure on bullion,
with the euro sliding from three-week highs against the dollar
after unexpectedly strong U.S. factory numbers. [FRX/]
                                
 "Pressure (on gold) is expected to return over the next
week or two based on our expectation for a reversal in oil
prices, gains in the stock market and general stability in the
dollar," MF Global said in a note.
                                
 Despite the decline, many analysts say gold remains a good
long-term safe-haven investment amid persistent concerns over
euro zone debt levels and the U.S. growth outlook.
                                
 "The majority of factors for gold are very positive," said
Credit Suisse precious metals analyst Tom Kendall.
                                
 "If you were looking for negatives, you would have to say
the lack of any sizable dehedging program this year from the
miners would be one that you could pick up on, but from the
investment community, sentiment is still very much bullish
towards gold."
                                
 Platinum <XPT=> slid 1.5 percent to $1,736 an ounce, while
palladium <XPD=> lost 3.4 percent to $763.08.
Prices at 12:57 p.m. EST (1757 GMT)                           
                                
                           LAST      NET    PCT     YTD
                                
                                     CHG    CHG     CHG
US gold         <GCG1>     1376.70   -46.20  -3.3%   -3.1%
US silver       <SIH1>      29.470   -1.655  -5.3%   -4.7%
US platinum     <PLJ1>     1746.70   -39.70  -2.2%   -1.8%
US palladium    <PAH1>      769.70   -30.70  -3.8%   -4.2%
Gold            <XAU=>     1376.24   -37.76  -2.7%   -3.0%
Silver          <XAG=>       29.42    -1.24  -4.0%   -4.6%
Platinum        <XPT=>     1739.49   -26.51  -1.5%   -1.6%
Palladium       <XPD=>      766.47   -23.50  -3.0%   -4.1%
Gold Fix        <XAUFIX=>  1388.50   -17.00  -1.2%   -1.5%
Silver Fix      <XAGFIX=>    30.67     4.00   0.1%    0.1%
Platinum Fix    <XPTFIX=>  1753.00    15.00   0.8%    1.3%
Palladium Fix   <XPDFIX=>   784.00     8.00   1.0%   -0.9%
 (Additional reporting by Jan Harvey in London; Editing by
Marguerita Choy)