* Option expiry, weak data send gold to lowest since May
* Gold posts biggest one-day loss in almost a month
* Bullion at risk to break below two-year support channel
* Coming up: U.S. June durable goods data on Wednesday
(Recasts, adds comments, updates prices, changes byline,
dateline, previous LONDON)
By Frank Tang
NEW YORK, July 27 (Reuters) - Gold dropped 2 percent on
Tuesday to a near three-month low under $1,160 an ounce, as
weak consumer confidence data and an option expiration
triggered heavy technical selling.
After trading modestly weaker in early sessions, bullion
prices accelerated losses to hit a low of $1,157.65 an ounce,
the cheapest price since May 5 despite firm U.S. stock markets
and a flat dollar. Gold also posted also its biggest one-day
decline since July 1.
Silver and platinum group metals tracked gold and crude oil
to fall sharply after data showed stagnant growth of U.S. home
prices and as job worries drove July U.S. consumer confidence
to its lowest since February. []
Sean Lusk, market specialist at Chicago-based futures
broker PFGBest, said that dealers sold heavily in an attempt to
push gold futures prices lower as COMEX August gold options
were expiring on Tuesday.
Gold prices sometimes gravitate toward an option strike
price as traders try to profit from their bets when options are
about to expire.
"In conjunction with the option expiration here, you have a
lot of longs liquidating and rolling into another forward
months," Lusk said.
Price volatility has spiked ahead of August's first-notice
day on Friday, as gold investors rolled their August futures
into December contracts, traders said.
Spot gold <XAU=> was at $1,160.15 an ounce at 2:29 p.m. EDT
(1829 GMT), against $1,183.75 late in New York on Monday. U.S.
gold futures for August delivery <GCQ0> settled at a
three-month low at $1,158 an ounce, down $25.10.
Gold also looked vulnerable on technical charts. Bullion
prices are at risk of breaking below a two-year bullish support
channel and could fall toward $1,000 an ounce, CitiFX said.
[]
If gold prices close the week below the two-year rising
support line at around $1,176, it would point to extended
losses. A divergence on weekly charts, where oscillators like
the RSI did not make a new high when gold was hitting its
record high at $1,264.90 an ounce last month, was also bearish,
CitiFX said.
(Graphic: http://link.reuters.com/duw79m)
A weekly close through the base of the channel could lead
to loses toward $1,030-1,045, a level last seen in February.
GLD OUTFLOW DENTS SENTIMENT
A decline in holdings of the world's biggest gold ETF, SPDR
Gold Trust <GLD>, suggests the investment demand that drove
prices earlier in the year is waning, analysts said. The trust
has recorded an outflow of 18.7 tonnes of gold so far this
month. []
The metal rose to an all-time high of $1,264.90 an ounce in
June as concerns over sovereign debt levels in the euro zone
fueled buying of the metal as a haven from risk, but has
struggled to hold those levels as such fears recede.
Sentiment turned weaker after India's central bank raised
interest rates more strongly than expected, in the face of
inflation that has held above 10 percent for the past five
months. India is the world's biggest gold buyer
[]
Gold priced in euros and sterling also fell on Tuesday.
Euro-priced gold <XAUEUR=R> fell to its weakest since May 4 at
892.23 euros an ounce, while sterling-denominated bullion
<XAUGBP=R> reached a three-month trough at 744.30 pounds an
ounce.
Among other precious metals, silver <XAG=> was at $17.63 an
ounce against $18.14, platinum <XPT=> was at $1,530.50 an ounce
versus $1,548.25 and palladium <XPD=> at $465 versus $471.70.
Prices at 2:57 p.m. EDT (1857 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCQ0> 1158.00 -25.10 -2.1% 5.6%
US silver <SIU0> 17.626 -0.574 0.0% 4.6%
US platinum <PLV0> 1536.70 -19.10 -1.2% 4.5%
US palladium <PAU0> 466.55 -8.45 -1.8% 14.1%
Gold <XAU=> 1160.25 -23.50 -2.0% 5.8%
Silver <XAG=> 17.60 -0.54 -3.0% 4.5%
Platinum <XPT=> 1529.00 -19.25 -1.2% 4.3%
Palladium <XPD=> 464.50 -7.20 -1.5% 14.5%
Gold Fix <XAUFIX=> 1168.00 -16.00 -1.4% 5.8%
Silver Fix <XAGFIX=> 18.16 15.00 0.8% 6.9%
Platinum Fix <XPTFIX=> 1560.00 2.00 0.1% 6.4%
Palladium Fix <XPDFIX=> 478.00 2.00 0.4% 18.9%
(Additional reporting by Jan Harvey in London; Editing by
Marguerita Choy)
