* Gold caught in wider commodities selling
* Silver's biggest one-day loss since February
* Platinum, silver, palladium slide in gold's wake
* Coming up: U.S. monthly retail sales due Monday
(Recasts, updates with comments, market activity, comment,
changes byline/dateline, previously LONDON)
By Frank Tang
NEW YORK, Nov 12 (Reuters) - Gold suffered its biggest fall
in four months on Friday, tumbling 3 percent as Chinese
rate-hike talk, eurozone debt worries and weaker Treasuries
prices triggered widespread unwinding of risk in commodities.
After holding firm this week in the face of the dollar's
best gains in three months, gold buckled mid-morning as the
euro cut gains in tandem with falling U.S. Treasuries prices,
when the first day of heavy purchasing by the Federal Reserve
failed to jump-start wider demand for debt. [] []
Spot silver <XAG=> tumbled almost 7 percent, its biggest
one-day loss since February and second major slide this week,
as investors liquidated more positions in heavy trade after the
exchange raised margins by 30 percent earlier this week.
In a week marked by disrupted correlations and extreme
volatility, dealers said precious metals were caught up in near
indiscriminate selling across the commodity spectrum rather
than suffering from any bullion-specific bearishness.
Spot gold <XAU=> slid 3.3 percent to $1,362.66 an ounce at
2:09 p.m. EDT (1909 GMT), having earlier hit a one-week low at
$1,359.70 an ounce. It was the biggest one-day fall since July
1.
U.S. gold futures for December delivery <GCZ0> settled down
$37.80 an ounce at $1,365.50.
The Reuters/Jefferies CRB <.CRB> index dropped almost 4
percent, its biggest daily loss in a year and a half, after a
sell-off triggered early by fears of a Chinese interest rate
rise snowballed through the rest of the session. Copper <CMCU3>
and oil <CLc1> fell 3 percent, wheat <Wc1> dropped 5 percent
and sugar <SBc1> 12 percent. []
"We have a liquidation pattern across the board in every
commodity market here," said Adam Klopfenstein, senior market
strategist with MF Global's unit Lind-Waldock.
"Gold and other commodities are going to suffer in the
short run as a result of the change in the opinion in the
marketplace that China might not be able to grow as fast if it
is going ... to rein in ... inflation or to curb fast money
that has been spurring the economy," Klopfenstein said.
China stocks fell more than 5 percent on Friday for their
biggest percentage loss in over a year, sparking a global
commodities sell-off on speculation the central bank will raise
interest rates to tackle inflation. []
China this week raised bank reserve requirements, boosted
yields on new government bills, and introduced new rules to
curb money inflows. Those moves came ahead of Thursday data
showing Chinese inflation at a 25-month peak, and spurring
speculation that an interest rate hike will follow soon.
Other commodities extended losses at midday after the Fed
bought $7.23 billion in Treasury paper on Friday under its $600
billion bond-buying program announced last week to stimulate
the economy. Treasuries prices hit session lows after the Fed
completed its purchases, with both seven-year notes <US7YT=RR>
and 10-year notes <US10YT=RR> trading a full point lower in
price.
"People are worried now about China tightening. China has
been driving a lot of commodities and so fears of further
interest rate rises in China ... will have an impact on
buying," said David Thurtell, a London-based analyst for
Citigroup.
The euro rose from a six-week low against the dollar after
European leaders sought to reassure nervous bondholders about
the value of their holdings, and as Ireland said it has not
formally applied for emergency funding from the European Union.
[]
While the inverse link between gold and the dollar weakened
significantly this week as investors focused on European risk,
it resurfaced part-way through Friday's trade when the euro
pared gains as roiling financial markets outweighed a move by
European leaders to reassure nervous bondholders.
(Graphic: http://r.reuters.com/xuc35q)
G20 DISAPPOINTMENT
Analysts said that gold should be supported by underlying
safe-haven buying after the G20 meeting highlighted deep
divides on currencies and trade imbalances among member
countries.
G20 leaders closed ranks on Friday and agreed to a
watered-down commitment to watch out for dangerous imbalances,
yet offered investors little proof the world was any safer from
economic catastrophe. []
Interest in investment vehicles such as exchange-traded
funds was soft, with holdings of the world's largest
gold-backed ETF, New York's SPDR Gold Trust <GLD>, falling by
just under 1 tonne on Thursday. []
Among other precious metals, spot silver <XAG=> dropped 6.5
percent to $25.94 an ounce, while platinum <XPT=> fell 4.5
percent to $1,673.24 an ounce and palladium <XPD=> slipped 5.2
percent to $672.72.
Prices at 2:27 p.m. EST (1927 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCZ0> 1365.50 -37.80 -2.7% 24.6%
US silver <SIZ0> 25.942 -1.463 -0.1% 54.0%
US platinum <PLF1> 1684.60 -61.20 -3.5% 14.5%
US palladium <PAZ0> 673.65 -30.50 -4.3% 64.8%
Gold <XAU=> 1364.60 -44.79 -3.2% 24.5%
Silver <XAG=> 25.93 -1.82 -6.6% 54.0%
Platinum <XPT=> 1673.24 -78.76 -4.5% 14.2%
Palladium <XPD=> 672.97 -36.75 -5.2% 66.0%
Gold Fix <XAUFIX=> 1388.50 1.50 0.1% 25.8%
Silver Fix <XAGFIX=> 26.79 -96.00 -3.5% 57.7%
Platinum Fix <XPTFIX=> 1712.00 7.00 0.4% 16.8%
Palladium Fix <XPDFIX=> 703.00 19.00 2.8% 74.9%
(Additional reporting by Jan Harvey and Marie-Louise Gumuchian
in London; Editing by Lisa Shumaker)
