Last checked at 
* U.S. stocks sharply lower in afternoon trading
* Gold prices rally
* U.S. bond prices fall
(Updates with closing oil prices)
By Caroline Valetkevitch
NEW YORK, Jan 4 (Reuters) - U.S. stocks dropped more than 1%
on Monday, the first trading day of the new year, pulling back
after recent gains to record highs, while the U.S. dollar was up
slightly.
Stocks hit record highs early in the session as investors
focused on the rollout of COVID-19 vaccines, but sentiment
quickly turned cautious over the path of the virus, which
continues to spread amid the discovery of a new variant.
The outcome of runoff elections on Tuesday in Georgia for
two U.S. Senate seats added to the nervousness.
"Investors are feeling a bit nervous on the first trading
day of the new year, and I think this is a confluence of
factors," said Lindsey Bell, chief investment strategist at Ally
Invest, in Charlotte, North Carolina.
MSCI's All-Country World Index, which tracks
stocks across 49 countries, was down 0.7% after earlier hitting
a record high.
The Dow Jones Industrial Average fell 492 points, or
1.61%, to 30,114.48, the S&P 500 lost 64.89 points, or
1.73%, to 3,691.18 and the Nasdaq Composite dropped
210.31 points, or 1.63%, to 12,677.98.
The pan-European STOXX 600 index rose 0.67%, while
Britain's FTSE 100 index closed up 1.7% on its first
post-Brexit trading day.
Britain began vaccinating its population with the COVID-19
shot developed by Oxford University and AstraZeneca on
Monday.
With the lag between a full vaccine rollout and a global
economic recovery, investors will count on central banks to keep
money cheap.
Minutes of the Federal Reserve's Dec. 15-16 policy meeting
are due on Wednesday and should offer more details on
discussions about making the U.S. central bank's forward policy
guidance more explicit and the chance of a further increase in
asset purchases this year.
Friday brings the U.S. employment report for December.
In currencies, the U.S. dollar recovered after falling to
its lowest level since April 2018.
The dollar index rose 0.169%, with the euro up
0.88% to $1.2244.
The Japanese yen strengthened 0.08% versus the greenback to
103.12 per dollar, while Sterling was last trading at
$1.3556, down 0.84% on the day.
Gold prices were up more than 2%, while U.S. crude
futures fell 1.9% to settle at $47.62 a barrel and Brent
futures dropped 1.4% to $51.09.
U.S. Treasury yields edged higher as traders repositioned at
the start of trading in the new year. Benchmark 10-year Treasury
notes last fell 1/32 in price to yield 0.9148%.
(Additional reporting by Ritvik Carvalho in London and by Medha
Singh and Shivani Kumaresan in Bengaluru; Editing by Toby
Chopra, Dan Grebler and Paul Simao)
