* Gold falls for a third session; no safe haven
* Bullion's $20 drop takes out 14-, 21-day moving averages
* Market volatility weighs as euro rallies from 4-yr lows
* Platinum, palladium tumble on weak economic sentiment
* Coming up: US jobless claims, Philly Fed on Thursday
(Recasts, adds comments, updates prices to market close,
changes byline, previous LONDON)
By Frank Tang
NEW YORK, May 19 (Reuters) - Gold slid more than 2 percent
on Wednesday, the biggest one-day fall since February, with
traders cashing in profits from last week's record high as
equity and commodity markets fell on deepening euro zone
worries.
After soaring to a record $1,248.95 last week on a rush for
safety from European buyers, gold has now shed $40 an ounce in
three days as investors sought to realise some profits as other
markets spiral lower, a decline worsened by technically based
selling as the market crosses key triggers.
Industrial metals fell even harder, in line with further
losses for copper and oil, with palladium slumping nearly 8
percent to its lowest since late March as volatility in the
euro, Germany's partial short-selling ban and global equity
losses all fed fears of worse times to come.
"When we hit all-time highs, everybody thought gold was
going to shoot straight up to the moon. Now, a lot of people
have decided to take their profits, and the big banks just put
in sell orders that hit the market," said COMEX gold floor
trader Dominick Cognata.
"I don't think the selling is over yet. I think we still
have another $20 on the downside."
Spot gold <XAU=> fell 2.3 percent or $27.80 an ounce to
$1,191.90 by 4:21 p.m. EDT (2021 GMT), just off its intraday
low of $1,186.62 an ounce.
U.S. gold futures for June delivery <GCM0> on the COMEX
division of the NYMEX fell $21.50, or 1.8 percent, to settle at
$1,193.10 an ounce.
Gold's long bull run has typically been fuelled by either
its value as a safe-haven asset in turbulent times or a hedge
against dollar inflation, but neither helped it on Wednesday.
Rather than benefit from turbulent external markets, gold
was caught in broad-based selling: the euro rebounded from a
four-year low versus the dollar on speculation that European
officials might act to support the currency; contagion fears
over Greece's debt crisis knocked other assets lower.
The S&P 500 U.S. stock index fell more than half a percent.
[]
"What is the use of an insurance policy if you can't cash
it in at some point?" said Daniel Major, an analyst at RBS
Global Banking & Markets.
"The reason why people might hold a percentage of their
portfolio in gold is because it is generally uncorrelated to
other assets, and people could easily be selling it down to
cover margin calls in many other asset classes."
TECHNICALS EXACERBATE DECLINE
A two-day, $30 decline in spot gold <XAU=> sent prices
below support at its 14- and 21-day moving averages. Also, some
analysts suggested a sell signal could be seen according to the
moving average convergence/divergence analysis (MACD).
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic on gold technicals: http://link.reuters.com/naw25k
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
COMEX open interest tumbled more than 20,000 to about
580,000 lots as of Tuesday, but still held near a record high
set on Monday, suggesting rising volatility after a sharp rally
to all-time highs, traders said. <NYMMTLFUT/VOI>
Platinum group metals and silver tumbled on fund unwinding
after recent rallies and as a euro zone debt crisis hampered
demand expectations for industrial metals.
Investment in gold stood firm, with holdings of the world's
largest gold-backed exchange-traded fund, New York's SPDR Gold
Trust <GLD>, steady at a record 1,217.108 tonnes on Tuesday.
Other precious metals also declined sharply, with silver
<XAG=> at $18.18 an ounce against $18.90, and platinum <XPT=>
sliding more than 4 percent to a seven-week low at $1,578.55.
It was last at $1,598.50 an ounce against $1,666.50.
Palladium <XPD=> was the biggest faller, slipping as much
as 8 percent to a seven-week low of $454.88, as traders
reported fund selling of the metal and risk aversion rose. The
metal was still 13 percent higher year-to-date despite a drop
from a two-year high of $570.50 last month.
Palladium was last at $456.25 against $495. Silver,
platinum and palladium are more industrial in use than gold,
and are therefore most exposed to weaker economic sentiment.
Close Change Pct 2009 YTD
Chg Close % Chg
US gold <GCM0> 1193.10 -21.5 -1.8 1096.20 8.8
US silver <SIN0> 18.115 -0.764 -4.0 16.845 7.5
US platinum <PLN0> 1605.70 -84.80 -5.0 1471.00 9.2
US palladium <PAM0> 459.70 -47.30 -9.3 408.85 12.4
Prices at 3:24 p.m. EDT (1924 GMT)
Gold <XAU=> 1193.25 -26.45 -2.2 1096.35 8.8
Silver <XAG=> 18.17 -0.73 -3.9 16.84 7.9
Platinum <XPT=> 1596.50 -70.00 -4.2 1465.50 8.9
Palladium <XPD=> 457.25 -37.750 -7.6 405.50 12.8
Gold Fix <XAUFIX=> 1195.00 -14.50 -1.2 1104 8.2
Silver Fix <XAGFIX=> 18.53 -29.00 -1.5 16.99 9.1
Platinum Fix <XPTFIX=> 1612.00 20.00 1.2 1466 10.0
Palladium Fix<XPDFIX=> 472.00 3.00 0.6 402 17.4
(Additional reporting by Jan Harvey in London; Editing by Lisa
Shumaker)
