US gold futures dropped nearly 2 percent on Thursday as a Wall Street rally prompted profit taking, while an imminent bankruptcy filing by US automaker Chrysler should not affect platinum group metals demand, traders said.
Gold for June delivery was down $16.40, or 1.8 percent, at $884.10 an ounce at 10:50 a.m. EDT (1450 GMT) on the COMEX division of the New York Mercantile Exchange. Ranged from $880.10 to $900.80.
A second-day equities rally dented safe-haven demand for gold, after the Federal Reserve on Wednesday said the US recession appeared to be easing, said traders. Gold selling seen in anticipation of non-inflationary US economic data, said George Nickas, FC Stone commodities broker. Market talk of selling pressure from gold-backed exchange-traded fund weighed on gold futures.
Bullion holdings of the largest gold ETF, the SPDR Gold Trust, were unchanged for a fourth session on Wednesday. Market sentiment dampened by news that Indian gold sales ahead of the key festival of Akshaya Tritya this week dropped 8 percent from a year ago, a much bigger decline than estimated, according to World Gold Council.
COMEX estimated 10 a.m. electronic futures volume at 51,201 lots. Gold/oil ratio at 17.35, down from the previous session's level as gold tumbled and crude oil edged up. Spot gold traded at $881.40 an ounce, down 1.7 percent from its late Wednesday quote in New York.
The London afternoon gold fix was $883.25 an ounce. COMEX July silver tumbled 53.0 cents, or 4.1 percent, at $12.245 an ounce, following gold's decline. Ranged from $12.185 to $12.820. COMEX estimated 10 a.m. volume at 9,088 lots. Spot silver was at $12.22 an ounce, down 4.1 percent from its previous finish. The London silver fix at $12.630 an ounce.
NYMEX July platinum dropped $10.80 to $1,096.00 an ounce, extending losses this week on uncertainty about US automakers. Platinum and palladium are used to clean exhaust fumes from vehicle tailpipes. Spot platinum at $1,088.50 an ounce, down 0.6 percent from its late Tuesday quote. June palladium tracked platinum to fall $2.60 to $220.40 an ounce. Spot palladium was at $216.50 an ounce, down 0.9 percent from its previous finish.
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