US MIDDAY: gold tumbles again

Gold fell 2 percent in a second straight decline on Wednesday, hit by technical selling and investors quitting bullion trades a day after the Federal Reserve upgraded its US economic outlook. The 5 percent or $80 slide over two days has removed the premium gold enjoyed based on expectations of further US monetary easing to stimulate the economy.
The precious metal has now erased gains made since late January when the Fed said it would keep interest rates for the next several years. It is down almost 9 percent since late February. Some funds appear to have closed out of their bullish gold bets, fearing the Fed could be done with quantitative easing after a string of improved data, including employment and retail sales.
Gold, which has appeared to lose its safe-haven appeal and has taken to trading in tandem with riskier assets, was also pressured by encouraging stress tests on most US banks. Silver also tumbled around 5 percent. Some analysts said gold could fall further after it crashed below its 200-day moving average, a key technical support during its three-year bull run. Several sudden corrections since last September have also shaken investor confidence in the traditional safe haven.
"I think it's not yet (time to buy gold), not necessarily because it's going to drop another 5 to 10 percent, but rather we are now technically in a downtrend," said Oliver Pursche, managing partner of GMG Defensive Beta Fund. Spot gold was down 2.3 percent at $1,636.80 an ounce by 2:12 pm EDT (1812 GMT), having hit a low of $1,635.39 - its lowest since January 16. US April gold futures settled down $51.30 at $1,642.90 an ounce. Trading volume was 60 percent above its 30-day average, set to be one of the busiest days since mid January.
Silver, which had sharply outperformed gold so far this year, fell 4.8 percent to $31.77 an ounce. Year to date, gold is still up 5 percent after 11 consecutive yearly gains, while silver is 15 percent higher after posting a 10-percent decline last year. The improving US industrial data were reflected in the performance of platinum and palladium due to their use in car production.
Platinum is enjoying a premium of around $30 to gold, after supply worries helped it reverse its unusual discount to bullion. Since Tuesday, platinum has been back in pole position, which marked the first time since September. Platinum was last down 1 percent at $1,664.50 an ounce, while palladium fell 1.6 percent to $689.