(Updates prices)
By Lewa Pardomuan
LONDON, May 13 (Reuters) - Gold dropped more than 2 percent
on Tuesday as the dollar extended gains after news of
unexpectedly strong core U.S. retail sales in April robbed
bullion of some of its appeal as an alternative investment.
Gold's weakness spurred selling in other precious metals.
Platinum fell more than 3 percent -- the day after it jumped
to its highest level in almost two months on speculative buying
following the launch of U.S. platinum exchange-traded notes.
Spot gold <XAU=> hit a low of $860.90 an ounce, down from
$884.60/886.00 late in New York on Monday.
"Gold has been reflecting movements in crude oil and the
dollar tick by tick, and the true fundamentals of gold have
clearly taken a backstage," said Pradeep Unni, analyst at Vision
Commodities Services in Dubai.
"Buying is likely to gather momentum once spot gold scythes
$892 levels, but gains could be limited to around $904 to $914,"
said Unni, adding there was a possibility that gold would
revisit the $850 to $841 levels.
The most active June gold futures contract <GCM8> on the
COMEX division of the New York Mercantile Exchange fell more
than 1 percent to $868.7 an ounce, down $16.2 from Monday's
close.
Gold has struggled to recapture $900 as speculators booked
profits since pushing up prices to a lifetime high of $1,030.80
an ounce on March 17 on record high oil, which raised its appeal
as a hedge against inflation, and a struggling dollar.
"Perhaps further weakness in oil will also weigh on gold. I
think it will be in a range, unless we see some substantial
news. The topside is $890 to $900," said Adrian Koh, an analyst
at Philip Futures in Singapore.
"But on the downside, a move below $870 should bring us much
lower. Perhaps we may see $845 level again," said Koh, referring
to a four-month low hit in early May.
The dollar rose broadly after strong retail sales, excluding
automobiles, in April supported views the Federal Reserve would
probably not cut interest rates again next month. []
Spot platinum <XPT=> fell as low as $2,030.50 an ounce, down
from $2,099/2,119 late in New York on Monday, when it hit a high
of $2,103 an ounce -- its best level since March 17.
"I think platinum faces strong resistance around the $2,100
to $2,120 regions. It's going to need some really bullish news
to move above those regions," said Koh of Philip Futures.
Investment bank UBS <UBSN.VX> launched two ETNs offering
long and short trading strategies in platinum last week. ETNs,
unlike exchange-traded funds, do not purchase physical platinum
to back the number of shares sold.
Palladium <XPD=> dipped to $432.50/440.50 an ounce from
$436/444 in late New York. Silver <XAG=> fell to $16.68/16.74 an
from $17.12/17.18 in New York.
(Editing by Chris Johnson)
