SINGAPORE (Reuters) - Gold regained strength on Thursday as more physical buyers resurfaced after prices struck another 11-month low, but the U.S. dollar's strength against the euro threatened to cap gains.
Investors, who propelled gold to a lifetime high of $1,030.80 in March on inflation fears and a struggling dollar, are ditching their bullion holdings as the U.S. currency stages a dramatic rebound. Other precious metals have slumped to multi-month lows. Gold rose 0.2 percent to $754.40/755.60 an ounce by 0701 GMT, rebounding from an intraday low of $748.60 an ounce. It fell to $752.55/754.15 in New York on Wednesday, down 6 percent in two days, the sharpest two-day loss since March. "We are getting some buying ahead of the festive season. Other than that, we still see some paper gold trading as well, but it's quieter than yesterday," said Beh Hsia Wah, a dealer at United Overseas Bank in Singapore. The dollar hit another a new one-year high against the euro on Thursday as investors refocused on sluggish economic prospects outside the United States, although worries about the U.S. financial system hung over the market. Physical dealers reported a shortage in gold bars in Singapore and Hong Kong as jewellers stepped up purchases ahead of religious festivals in India, the Middle East and Southeast Asia. Many weddings take place during the festive season in India which peaks in October with Diwali, the Hindu festival of lights. Gold jewellery forms an important part of dowry as parents prefer to give gold to their daughters for financial security. "Investor interest has diminished because of the movement of the U.S. dollar and the oil price," said David Moore, analyst at Commonwealth Bank of Australia in Sydney. "There's some evidence of increasing fabrication demand for gold at this level, so that might be supportive. But at the moment, of course the shift in investment flow is overwhelming that influence," he said. A stronger dollar reduce gold's appeal as an alternative investment. The bullion holdings of SPDR Gold Trust, the world's largest gold- backed exchange-traded fund, dropped to their lowestlevel in three months around 614 tonnes. Oil climbed more than $1 to near $104 a barrel on Thursday, having fallen the previous day as a jump in the U.S. dollar offset a surprise OPEC output cut. "I think the market is a bit panicky at the moment because it has broken all the major supports. People are very cautious about oil prices, the U.S. dollar and everything," said Ellison Chu, manager of precious metals at Standard Bank Asia in Hong Kong. The benchmark gold contract on the Tokyo Commodity Exchange, August 2009, fell 71 yen per gram lower at 2,619 yen. Spot platinum fell to $1,161.50/1,181.50 an ounce from $1,176.00/1,196.00 late in New York. It hit an intraday low of $1,150.50 an ounce, its weakest since January 2007 and nearly half the record high it touched in March. Platinum, mainly used in autocatalysts, has been hit by heavy selling due to a slowing U.S. economy and poor car sales in the United States, Japan and China. --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "Kences1" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [EMAIL PROTECTED] For more options, visit this group at http://groups.google.com/group/kences1?hl=en -~----------~----~----~----~------~----~------~--~---
