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PRECIOUS-Gold falls 1 pct as euro drops after Italy votes against reform

Published 05/12/2016, 08:04 pm
© Reuters.  PRECIOUS-Gold falls 1 pct as euro drops after Italy votes against reform
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* Euro falls to near 2-year low on Italy's referendum defeat

* Specs cut net longs in COMEX gold to lowest since February (Updates prices)

By Swati Verma and Sethuraman N R

BENGALURU, Dec 5 (Reuters) - Gold fell more than 1 percent on Monday as the euro slid against the dollar after Italian Prime Minister Matteo Renzi conceded defeat in a referendum over his plan to reform the constitution.

The political uncertainty in the euro zone earlier spurred safe-haven demand for gold, but the precious metal later surrendered gains to trade lower.

Spot gold XAU= was down 1.2 percent at $1,163.01 an ounce by 0846 GMT. U.S. gold futures GCcv1 shed 1.1 percent to $1,164.70 per ounce.

"Looks like people are buying the U.S. dollar and that is in turn prompting selling in gold," said Yuichi Ikemizu, head of commodity trading at Standard Bank in Tokyo.

"People bought gold after the Italian referendum and it looks like they are selling back."

The euro fell to its lowest in nearly two years against the dollar after Renzi said he would resign following a stinging defeat on constitutional reform that could destabilise the country's shaky banking system. USD/

Speculators reduced their net long position in gold futures and options by 17,843 lots to 103,392 lots, the lowest since February, U.S. Commodity Futures Trading Commission data showed on Friday. losses in gold, silver XAG= dropped 0.7 percent to $16.58 an ounce, after touching its highest in more than two weeks earlier in the session.

Platinum XPT= was flat at $927.80 an ounce and palladium XPD= slid 1 percent to $733.30 an ounce.

"We expect palladium to continue outperforming and recommend buying palladium on dips against platinum," Mark Keenan, commodity strategist at Societe Generale (PA:SOGN), wrote in a note.

"Platinum is also facing headwinds from a weaker South African rand, which makes it more profitable to produce platinum."

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