Gold rises after sudden early tumble, equities drop

New York (Jan 6)   U.S. gold futures rose on Monday, shaking off an unusual and sudden tumble earlier in the session, as weakness on Wall Street extended bullion's rally to
a third consecutive session.

The benchmark S&P 500 index fell after data showing the pace of growth in the U.S. services sector slowed in December for a second straight month while new orders for
factory goods rebounded in November. A weaker dollar also helped boost gold.

Analysts said gold appeared to find support from equities' losses at the beginning of 2014 following bullion's tumble and stock markets' record run-up last year.

"It could very well be funds reconfiguring where they stand in terms of gold positions after cutting them last year," said Thomas Capalbo, a precious metals trader at Newedge, a brokerage in New York.

Spot gold was trading up 0.4 percent at $1,241.40 an ounce by 12:51 p.m. EST (1751 GMT), having earlier hit a one-week high of $1,248.30.

The yellow metal has now rallied 3 percent since the start of the year following its 28 percent loss in 2013 - its worst annual performance since 1982.
 U.S. gold futures for February delivery rose $2.40 to $1,241 an ounce, trading in a choppy $35 range between $1,247.70 and $1,212.60.

Unusually heavy trade volumes rattled U.S. gold futures earlier on Monday, triggering a brief halt while temporarily sending bullion prices down over $30 an ounce, or about 3
percent between 10:14 a.m. and 10:15 a.m. EST.

It was not immediately clear what sparked the volatility, which prompted gold traders to speculate the move was a result of a so-called fat-finger erroneous trade.
CME Group said "all trades stand and our technology performed as designed."

 Frank McGhee, head precious metals dealer at Chicago
commodities brokerage Alliance Financial LLC, said some gold
traders stood ready to sell after the unusual slide dented
buying sentiment.