PRECIOUS-Gold heads for biggest quarterly loss on record – by Jan Harvey (Reuters U.S. – June 26, 2013)

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LONDON, June 26 (Reuters) – Gold fell to its lowest in almost three years on Wednesday, putting it on course for a record quarterly loss, as U.S. economic data increased fears the Federal Reserve will soon end ultra-loose monetary policy.

Prices could slide further – some investors saying below $1,000 per ounce – while there is little potential for data, market trends or economic developments in the United States or Europe to reverse an accelerating investor move out of gold.

Spot gold tumbled to its lowest since August 2010 at $1,223.54 an ounce and was down 3.8 percent at $1,227.86 an ounce at 1032 GMT. U.S. gold futures for August delivery were down $47.60 at $1,227.90, having hit a low of $1,223.20.

Strong gains in U.S. orders for durable goods, the largest annual rise in house prices in seven years and rising consumer confidence fuelled speculation the Fed would rein in its $85 billion monthly bond-buying programme, which had helped push gold prices to record highs in recent years.

“We bought gold for two reasons – because we were worried about the inflationary impact of policy and because we thought the financial system was going to fall apart,” Sean Corrigan, chief investment strategist at Diapason Commodities Management, said.

“Although it may be completely the wrong judgement, the market has decided that none of those at the moment is a concern.”

Spot prices have fallen by more than a quarter this year and by 22.8 percent this quarter, their biggest quarterly loss since Reuters data began in 1968.

“Gold has generally always outperformed at least other commodities when we’ve had financial stress, when volatilities have picked up, when credit spreads have widened – and it’s clearly not doing that now,” Diapason’s Corrigan said.

European share markets were up Wednesday. Gains in global stock markets this year will be a signpost of more losses in gold, analysts say.

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