* Gold breaks below $1,170 as U.S. shows fewer job losses
* On track to post biggest 1-day percentage loss since Feb
* US gold below 14-day moving average
(Recasts, updates prices, market activity; adds second byline,
dateline, previously LONDON)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Dec 4 (Reuters) - Gold fell more than 3
percent to below $1,170 an ounce on Friday, as the dollar
rallied after U.S. data showed far fewer job losses than
expected last month.
Gold was on track for its biggest one-day percentage loss
since February, but remained up 33 percent year to date.
Dealers said bullion was due for a correction after
investment funds and individual investors piled into the metal
amid concern about currency values and potential inflation.
"We've had a big move in a short period of time and it was
clearly overbought. It was susceptible to a pullback. I don't
think this is a surprise," said Caesar Bryan, who manages $650
million mutual fund assets at New York-based GAMCO Gold Fund.
Spot gold <XAU=> fell as low as $1,167.65. It was at
$1,173.90 an ounce at 12:43 p.m. EST (1743 GMT), down from
$1,207.10 late in New York on Thursday.
U.S. gold futures for February delivery <GCG0> on the COMEX
division of the New York Mercantile Exchange fell more than $40
to $1,175 an ounce.
Gold accelerated losses after the Labor Department reported
that U.S. employers cut 11,000 jobs in November, the smallest
number of job losses since the start of the recession in
December 2007. []
That report, which suggested the job market could begin to
recover soon, sent the dollar rallying against the euro and
yen. []
"Gold has been hit quite badly after the dollar
strengthened on the non-farm payrolls data ... counter to what
you would normally expect," said Dan Smith, analyst at Standard
Chartered.
Spot prices struck a record high at $1,226.10 an ounce on
Thursday amid expectations for persistent weakness in the
dollar and rising inflation in 2010.
"The euro has fallen back below $1.50 ... it has undercut
the need for the currency hedgers to purchase gold," said James
Steel, metals analyst at HSBC in New York.
CHART SUPPORT BROKEN
U.S. February gold futures broke below 14-day support level
at $1,171.40 an ounce. A drop below that could see prices
testing the Nov. 30 support at $1,165, and the next level will
be the intraday low at $1,135.80 on Nov. 27.
Some economists are suggesting the U.S. Federal Reserve may
be able to tighten monetary policy sooner than expected based
on positive economic data.
"The data point to a transition in the economy from a deep
recession to a modest recovery," said William Sullivan, chief
economist, JVB Financial Group in Florida.
"This will encourage the Fed to be more vocal about an exit
strategy from their highly accommodative posture."
Elsewhere, metals consultancy GFMS said China will overtake
India as the world's largest gold consumer in 2009, with total
demand forecast at 432 tonnes. Indian demand has been pressured
this year by rising prices. []
Among other precious metals, silver <XAG=> was at $18.53 an
ounce against $18.80 late on Thursday in New York.
Platinum <XPT=> fell almost 3 percent to $1,442 an ounce
against $1,480.50, while palladium <XPD=> was at $372.50
against $380.50.
Prices at 12:36 p.m. EST (1736 GMT)
Last Change Pct 2008 YTD
Chg Close % Chg
US gold <GCG0> 1176.90 -41.40 -3.4 884.30 33.1
US silver <SIH0> 18.590 -0.538 -2.8 11.295 64.6
US platinum <PLF0> 1457.20 -36.50 -2.4 941.50 54.8
US palladium <PAH0> 378.50 -8.30 -2.2 188.70 100.6
Gold <XAU=> 1175.60 -31.50 -2.6 878.20 33.9
Silver <XAG=> 18.54 -0.26 -1.4 11.30 64.1
Platinum <XPT=> 1450.50 -30.00 -2.0 924.50 56.9
Palladium <XPD=> 373.50 -7.00 -1.8 184.50 102.4
Gold Fix <XAUFIX=> 1190.25 -13.00 -1.1 836.50 42.3
Silver Fix <XAGFIX=> 18.83 -28.00 -1.5 14.76 27.6
Platinum Fix <XPTFIX=> 1472.00 12.00 0.8 1529.00 -3.7
Palladium Fix <XPDFIX=> 378.00 4.00 1.0 365.00 3.6
(Additional reporting by Veronica Brown and Pratima Desai in
London; Editing by David Gregorio)
((frank.tang@thomsonreuters.com; +1 646 223 6126;
Reuters Messaging: frank.tang.reuters.com@reuters.net))
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