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PRECIOUS-Gold rises as dollar steadies, ETF eases from record

Published 06/04/2009, 01:51 AM
Updated 06/07/2009, 06:13 AM
PMC
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* Market seen at crossroads as $1,000 approaches

* Eyes on BoE, ECB rate decisions

* SPDR gold ETF holdings ease from record

By Chikako Mogi

TOKYO, June 4 (Reuters) - Gold prices rose on Thursday as investors bought back the metal after a round of profit-taking the previous day, when the U.S. currency climbed and oil prices tumbled.

Both spot gold and futures fell about 2 percent on Wednesday as commodities retreated broadly led by heavy losses in oil, the dollar's sharp recovery amid weaker U.S. economic indicators and steep losses on Wall Street. Investors returned to dollar assets as worries about the outlook for the economy and stock market declines dampened their appetite for risk.

On Thursday the dollar was steady against the yen and euro. [USD/]

"We are getting a bit of a bounce after the large sell-off yesterday, plus the dollar is a bit weaker after the rally on Wednesday," said Adrian Koh, an analyst at Phillip Futures.

Spot gold rose 0.4 percent to $966.30 per ounce from New York's notional close of $962.15 per ounce. It earlier fell as low as $961.20.

Gold last climbed above $1,000 on Feb. 20.

U.S. gold futures for August delivery rose 0.2 percent to $967.70 per ounce from Wednesday's $965.60 on the COMEX division of the New York Mercantile Exchange. It settled down 1.9 percent on Wednesday, the biggest one-day percentage fall for the August contract since April 6.

Prices are hovering just below $1,000, where selling incentives for customers counter funds buying to hit options triggers that would lift prices above the key four-digit level.

Inflation worries and the dollar's weakness have supported a bullish view on gold, while bears said short-term funds were driving up the market so any gains would not last long. [ID:nT253112]

"I still think it's possible (to hit $1,000), but the markets are currently at an important crossroads and any further selling pressures could change that," Koh said, noting that if the market can hold above $960, which was the low for Wednesday's sell-off, then the $1,000 level was still realistic.

The holdings of the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust , eased 1.53 tonnes to 1,132.50 tonnes as of June 3, reflecting investor selling. On June 1, holdings rose to a record 1,134.03 tonnes. [GOL/SPDR]

Traders said they were watching interest rate decisions later on Thursday by the Bank of England and the European Central Bank.

Precious metals prices at 0524 GMT Metal Last Change Pct chg YTD pct chg Turnover Spot Gold 966.25 4.10 +0.43 16.04 Spot Silver 15.32 0.02 +0.13 3.72 Spot Platinum 1231.00 -2.50 -0.20 -19.01 Spot Palladium 239.50 -1.00 -0.42 -34.92 TOCOM Gold 3000.00 -53.00 -1.74 -1.96 38552 TOCOM Platinum 3833.00 -35.00 -0.90 -28.21 13049 TOCOM Silver 473.00 -19.60 -3.98 -12.57 516 TOCOM Palladium 752.00 -24.00 -3.09 -44.34 435 Euro/Dollar 1.4165 Dollar/Yen 96.16 TOCOM prices in yen per gram, except TOCOM silver which is priced in yen per 10 grams. Spot prices in $ per ounce. (Additional reporting by Risa Maeda; Editing by Hugh Lawson)

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