* Gold caught in cross-asset liquidation
* Soros cuts gold holdings, but cites perfect conditions
* Johnson Matthey upbeat on PGM outlook in 2011
* Coming up: U.S. October CPI Wednesday
(Recasts, updates comments, market activity, adds NEW YORK
byline/dateline)
By Frank Tang and Amanda Cooper
NEW YORK/LONDON, Nov 16 (Reuters) - Gold prices shed more
than 2 percent on Tuesday, on track for their biggest three-day
loss in nearly a year, as fears over Ireland's fiscal health
sent the dollar rallying against the euro, sparking a
cross-asset sell-off.
While gold often benefits as a risk-aversion strategy,
investors sometimes liquidate positions to cover losses
elsewhere in their portfolios.
Gold's drop was similar to a rout on Friday, when it
suffered its biggest fall in four months, as precious metals
were caught up in near indiscriminate selling across the
commodity spectrum rather than suffering from any
bullion-specific bearishness.
"There is across-the-board, margin-call type liquidation
going on. Investors hit by margin calls know that they can
always get liquidity from the gold market to raise capital,"
said Dennis Gartman, publisher of the investment newsletter The
Gartman Letter.
Some investors also ratcheted back their expectations of
the Federal Reserve's bond-buyback program to stimulate the
economy, after a group of Republican economists and executives
called on the Fed to drop its plan to buy $600 billion more in
Treasury bonds, Gartman said. []
Spot gold <XAU=> fell 2 percent to $1,333.40 an ounce at
12:39 p.m. EST (1739 GMT), having earlier set a two-week low at
$1,329.45. Bullion has lost more than 5 percent in the past
three sessions, its biggest loss since early December.
U.S. December gold futures <GCZ0> fell 2.6 percent to
$1,333.10 an ounce in heavy volume.
"Gold is a risk asset. We saw that post-Lehman Brothers,
when everyone thought gold would benefit and it sold off," said
Credit Agricole analyst Robin Bhar.
"People would liquidate, given that they've probably
secured good profits in the gold market ... and have taken some
money off the table," he said.
Gold, which is still up 22 percent this year, has lost
about 4 percent over the past week in the broad sell-off that
has knocked copper, crude oil and grains, which have in turn
suffered from mounting expectations for more monetary
tightening in top raw materials consumer China.
Ireland came under intense pressure on Tuesday to request
aid over its debt crunch in what the European Council's
president called a "survival crisis" for the euro zone and the
wider European Union. []
European officials were weighing a rescue package of 80
billion to 100 billion euros for Ireland and a separate,
smaller bailout for its hard-pressed banking sector, the Wall
Street Journal reported on Tuesday.
The euro fell to a seven-week low against the dollar on
Tuesday amid heightened worries about a deepening euro zone
debt crisis, with losses accelerating after prices broke key
support levels. []
FUNDS COOL TO GOLD
Coupled with flows out of hard assets was a cooling towards
bullion from some of the world's best-known gold bulls.
(Table of funds' position changes: [])
The most recent quarterly securities filings showed George
Soros cut his exposure to gold in the last quarter, along with
Eric Mindich. []
Billionaire investor Soros may be cutting back on his gold
bets, but he says the precious metal still has some kick to it,
as long as conditions like low interest rates prevail.
"The conditions for gold are pretty perfect," he said
during a speech in Toronto. "The big negative is that too many
people know this and a lot of hedge funds are very exposed ...
Gold has a tendency to go parabolic," he added, noting its
tendency to fall as quickly as it rises. []
Spot silver <XAG=> dropped 1.2 percent to $25.12 an ounce.
Platinum and palladium were both down sharply on the day,
in line with other metals, ignoring a bullish outlook for the
market next year from refiner Johnson Matthey, which said
improving supply and demand fundamentals should bring both
markets broadly into balance next year. []
(Graph http://link.reuters.com/zeg94q)
Platinum <XPT=> fell 1.9 percent to $1,636.74 an ounce.
Palladium was down 4.5 percent at $639.47, in its third
successive daily decline.
Prices at 12:48 p.m. EST (1748 GMT)
LAST NET PCT YTD
CHG CHG CHG
US gold <GCZ0> 1331.60 -36.90 -2.7% 21.5%
US silver <SIZ0> 25.150 -0.942 -3.6% 49.3%
US platinum <PLF1> 1641.00 -44.80 -2.7% 11.6%
US palladium <PAZ0> 643.00 -38.30 -5.6% 57.3%
Gold <XAU=> 1331.79 -27.99 -2.1% 21.5%
Silver <XAG=> 25.15 -0.27 -1.1% 49.3%
Platinum <XPT=> 1636.24 -32.50 -1.9% 11.7%
Palladium <XPD=> 641.00 -28.22 -4.2% 58.1%
Gold Fix <XAUFIX=> 1349.00 -14.25 -1.0% 22.2%
Silver Fix <XAGFIX=> 25.48 -53.00 -2.0% 50.0%
Platinum Fix <XPTFIX=> 1658.00 12.00 0.7% 13.1%
Palladium Fix <XPDFIX=> 661.00 12.00 1.8% 64.4%
(Editing by Walter Bagley)
