* Oil, base metals slide, weighing on gold
* SPDR Gold Trust bullion holdings hit new record
* Platinum prices rise 2 percent to above $1,000/oz
(Updates prices)
By Jan Harvey
LONDON, Jan 7 (Reuters) - Gold slipped more than 3 percent
on Wednesday as oil prices fell and investors, disappointed at
the metal's failure to break technical resistance above $885 an
ounce, sold bullion in favour of more buoyant assets.
Spot gold <XAU=> was quoted at $838.90/840.90 an ounce at
1537 GMT, against $863.35 late in New York on Tuesday. Earlier
it touched a two-week low of $834.80.
U.S. gold futures for February delivery <GCG9> on the COMEX
division of the New York Mercantile Exchange were down $26.10 at
$839.90.
Spot silver <XAG=> tracked gold lower to $10.88/10.96 an
ounce from $11.44, having earlier dropped 5 percent.
"It looks as if the market is already very long, and there
is no fresh money coming in," said Deutsche Bank trader Michael
Blumenroth.
He said investors had become frustrated with the metal's
inability to break through technical resistance at $885-890.
"The other metals -- platinum, palladium and silver -- are
performing better than gold," he said. "Investors are buying
more platinum group metals at the moment."
A slip in oil prices is weighing on gold. Crude fell more
than 5 percent to below $46 a barrel as oil inventory data
showed a large rise in U.S. crude stocks. []
Nonetheless the longer term outlook for gold is positive.
The precious metal is likely to benefit from falling interest
rates, which cut the opportunity cost in holding gold, and from
uncertainty over the global economic outlook.
The dollar is also providing some short-term support. It
slipped on Wednesday after striking a one-month high against the
euro after a report showed steep job losses in the private
sector, fuelling fears of a U.S. recession. []
Gold is often bought as an alternative investment to the
U.S. currency and tends to move in the opposite direction to it.
Demand for the precious metal to back exchange-traded funds
is also firm. The world's largest gold-backed ETF, the SPDR Gold
Trust <GLD>, said its holdings rose to a record 788 tonnes on
Tuesday. []
SPDR has now overtaken the Bank of Japan as the seventh
largest holder of gold worldwide, Commerzbank said.
Traders are now looking ahead to economic data due later in
the week, including key U.S. non-farm payrolls data on Friday,
for clues as to the next direction of trade.
Disappointing payrolls data "could lead to weakness on the
equity markets and push more people towards gold," said Citi
analyst David Thurtell.
PLATINUM HITS 3-MTH HIGH
Platinum meanwhile climbed to a near three-month high above
$1,000 an ounce as investors switched their attention from fears
over demand from carmakers -- the major buyers of the precious
metal -- to the gloomy outlook for production as prices fall.
"Despite the drop in auto sales, with more mine closures
expected as producers cut less profitable facilities, we could
well see platinum gain further," said James Moore, an analyst at
TheBullionDesk.com.
Spot platinum <XPT=> rose through the $1,000 an ounce level
for the first time since October 15 to reach a session high of
$1,003 an ounce. It was later quoted at $970.50/980.50 an ounce,
up from $965.50 an ounce late in New York on Tuesday.
The precious metal's resilience to the ailing car market has
boosted hopes its price slide may be at an end, analysts said.
Platinum held steady through most of December, after bad
news from carmakers knocked prices down more than 60 percent
from their March 2008 highs of $2,290 an ounce.
Among other precious metals, spot palladium <XPD=> was
little changed at $195/198 an ounce from $196.
(Editing by Peter Blackburn)
