US MIDDAY: gold drops

Gold fell around 1 percent early on Thursday as stronger-than-expected economic data and upbeat corporate results boosted global equity markets, while the dollar index held near a one-week high and demand for physical metal eased. Bullion posted its second straight daily loss after data showed new claims for US unemployment benefits held below 300,000 for a sixth straight week last week, suggesting the labour market was shrugging off jitters over growth.
The S&P 500 index soared more than 1.5 percent in a broad rally, as strong results from industrial bellwethers reassured investors that corporations continue to fare well despite concerns about global economic growth. However, outflows from gold-backed exchange-traded funds suggested investment appetite for bullion was softening, analysts said.
"We're still having outflows from physically backed gold funds," Natixis analyst Bernard Dahdah said. "Western investors still aren't very excited about holding gold." Spot gold was down 0.9 percent at $1,229.12 an ounce by 2:08 pm EDT (1808 GMT), having earlier hit a one-week low of $1,226.17. US COMEX gold futures for December delivery settled down $16.40 an ounce at $1,229.10, with volume in line with its 30-day average, preliminary Reuters data shows.
Holdings of the world's largest gold-backed exchange-traded fund, New York's SPDR Gold Trust, fell 0.3 percent on Wednesday to 749.87 tonnes, the lowest since late 2008. Outflows from the fund this week have now topped 11 tonnes, the most of any week since mid-September.
Global stock markets are now well above last week's lows on worries about world economic growth. Gold rallied to a six-week high at $1,255.20 on Tuesday before stock markets turned around. Physical buying could also slow after the arrival of the Diwali festival in India, a major gold-buying event, analysts said. Precious metals house MKS said in a note that physical interest from China was short-lived and noted the lack of follow-through buying. "The recent physical support we have been seeing from India has now waned as they celebrate during their festival season," MKS said.
Silver rose 0.6 percent to $17.17 an ounce, while platinum was down 0.5 percent at $1,251.24 an ounce and palladium climbed 1 percent to $775.40 an ounce. Full production at Anglo American Platinum's strike-hit mines in South Africa resumed a month ahead of schedule in September as operations bounced back from a five-month strike, the company said on Thursday.