* Gold falls with crude after latest Goldman warning
* Gold/oil correlation tightens, near strongest since Jan.
* Rallying U.S. Treasuries bond prices weigh on bullion
* Coming up: U.S. March retail sales Wednesday
(Recasts, adds comment, link to graphic, updates market
activity,)
By Frank Tang
NEW YORK, April 12 (Reuters) - Gold dropped 1 percent on
Tuesday, on track for its biggest fall in a month, as a sharp
drop in crude oil on a bearish forecast from Goldman Sachs
dragged the metal further from record highs.
Rallying prices of U.S. government debt also took some
safe-haven bids away from gold, after Japan raised the severity
level of the crisis at its quake-stricken nuclear plant. []
Bullion has risen 11 percent since late January as rallies
in oil and grains stoked inflation worries. After hitting
31-year highs on Monday, silver also fell but less than gold
despite the white metal's higher price volatility.
"That (Goldman report) has given enough reasons for
investors to trim their positions, in particular for those
markets that have gone parabolic. That's enough to cool
enthusiasm for commodities at the moment," said Mark Luschini,
chief investment strategist of broker-dealer Janney Montgomery
Scott with $53 billion of assets under management.
But he added: "I don't think this is the end of the
commodity bull market."
Spot gold <XAU=> dropped 1 percent to $1,451.69 an ounce by
2:18 p.m. EDT (1818 GMT), having earlier hit a one-week low of
$1,443.49. On Monday, gold hit a record at $1,476.21.
U.S. gold futures for June <GCM1> settled down $14.5 at
$1,453.60 an ounce, with trading volume rebounding after
slower-than-normal activity in the last several sessions.
Goldman Sachs <GS.N> called a near $20 fall in the price of
Brent crude <LCOc1> in the coming months, saying speculators
have pushed prices ahead of fundamentals. []
It was the second warning of a steep market reversal from
the firm, which has been a long-term commodity bull, in as many
days. Bullion also fell sharply on Monday after Goldman
recommended clients close a trade heavily weighted towards U.S.
crude futures.
OIL LINK, SAFE HAVEN BID EYED
Gold is used as a safe haven particularly in times of
financial and geopolitical uncertainty. It's rise to record
highs during Japan's crisis coincided with historic rallies in
many commodities, most of which fell on Tuesday as investors
shed riskier assets.
The correlation between gold and oil tightened to 0.7 on
Tuesday, approaching its strongest level in nearly three
months, as recent crude rallies have increased gold's
inflation-hedge appeal.
(Graphic: http://link.reuters.com/pyd98r)
Poor investor sentiment more than offset weakness in the
dollar, which fell to a 15-month low against the euro. []
"Commodity prices, not only gold but also the base metals
and the energy space are not profiting from the weaker dollar,"
said Commerzbank analyst Daniel Briesemann.
Commodities investors also took heed of a warning by the
International Monetary Fund on Monday that soaring oil prices
and inflation in emerging economies pose new risks to global
recovery even as they are not yet strong enough to derail it.
The threat to global inflation from higher energy prices
has been one of the driving forces behind gains in gold.
Silver <XAG=> reversed earlier gains to trade down 0.3
percent at $40.04 an ounce, and was about 5 percent below
Monday's 31-year high at $41.93.
Among platinum group metals, platinum <XPT=> lost 0.7
percent at $1,768.50 an ounce, while palladium <XPD=> fell 2.6
percent to $760.72.
Prices at 2:18 p.m. EDT (1818 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCM1> 1453.60 -14.50 -1.0% 2.3%
US silver <SIK1> 40.066 -0.546 0.0% 29.5%
US platinum <PLN1> 1774.30 -18.50 -1.0% -0.2%
US palladium <PAM1> 770.10 -18.15 -2.3% -4.1%
Gold <XAU=> 1451.69 -15.06 -1.0% 2.3%
Silver <XAG=> 40.04 -0.13 -0.3% 29.7%
Platinum <XPT=> 1768.50 -11.80 -0.7% 0.1%
Palladium <XPD=> 760.72 -20.63 -2.6% -4.9%
Gold Fix <XAUFIX=> 1450.50 -10.75 -0.7% 2.9%
Silver Fix <XAGFIX=> 40.44 -93.00 -2.2% 32.0%
Platinum Fix <XPTFIX=> 1785.00 5.00 0.3% 3.1%
Palladium Fix <XPDFIX=> 783.00 2.00 0.3% -1.0%
(Additional reporting by Amanda Cooper in London and Lewa
Pardomuan in Singapore; Editing by Alden Bentley)
