NEW YORK, June 27 (Reuters) - Gold succumbed to profit taking Thursday, as investors lightened safe-haven holdings and brushed the dust off after Wednesday's Wall Street-rattling WorldCom bombshell, dealers said.
Stronger-than-expected data on first-quarter economic growth helped calm nervousness that another Enron-like corporate accounting scandal could undermine confidence in U.S. business and derail the fragile economic recovery.
"The equities rallied, so that obviously inhibited the gold market from the highs yesterday (which were) pretty much made in concert with the lows in the equity market," said Greg Weldon, a consulting analyst for Prudential Securities.
COMEX August gold seesawed, mirroring the stock market volatility. It closed down $1.20 at $319.60 an ounce, trading $321.50 to $316.90.
Spot gold last fetched $319.00/50, down from $320.00/0.50 at Wednesday's close. Thursday's afternoon fix by London bullion dealers was $318.80.
The Dow Jones industrial average opened strongly and was up 70 points, recovering from a midday sell-off and spasms over the $3.85 billion in expenses improperly claimed by WorldCom -- the no. 2 long distance carrier -- since early 2001.
The Commerce Department said in its final fourth-quarter gross domestic product report Thursday that the economy expanded at a brisk 6.1 percent annual rate, up from the preliminary 5.6 percent rate reported last month. Economists see slower growth in the second quarter.
GDP grew at a 1.7 percent rate in the fourth quarter of 2001.
The Federal Reserve on Wednesday said it left interest rates unchanged at 40-year lows, biding time until a full-throated economic recovery is in place.
The dollar, meanwhile, fell on the day, but was still up from Wednesday's 28-month low at 99.44 cents per euro.
"I think going forward the dollar has further to depreciate and gold has further to appreciate," said Weldon. "The questions are, is Fed going to be viewed as responsive? Or is stock market going to be viewed as having bottomed? The latter is kind of out of the question unless the former is true."
A weak greenback enhances the buying power of European investors for dollar-priced commodities and -- combined with stock market uncertainty and geopolitical instability -- was a catalyst for gold's rally to 2-1/2-year highs above $330 an ounce three weeks ago.
"Is the cup half full or half empty?" mused a bullion dealer. "The people who have been liquidating long positions are happy to take profits in an environment where it's easy to sell gold -- the environment being a relatively weak stock market and certainly a weak dollar."
But a huge long position on the COMEX is giving the market indigestion.
"Some of the longer-term guys have actually taken profits here and they're the people who have passed the gold on to people who are currently hanging on to it," said the dealer.
July silver rose 2.4 cents to $4.876 an ounce, near the high of a $4.88-$4.80 range. Spot silver was at $4.86/88, up from $4.84/86 late Wednesday. It fixed at $4.82.
NYMEX July platinum fell $6.50 to $540 an ounce. Spot platinum was last at $535.50/543.50. A week ago it hit a one-year high at $569.
Selling in Tokyo has led the down move in platinum.
September palladium was off $5 at $317, plumbing yet another low for the contract at $314 an ounce. Spot palladium fetched $313/325.