* Stock market losses, oil tumble prompt gold liquidation
* Platinum prices rise 2 percent to above $1,000/oz
* SPDR Gold Trust bullion holdings hit new record
(Recasts, updates with quotes, closing prices, adds NEW YORK
to dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Jan 7 (Reuters) - Gold dropped nearly 3
percent on Wednesday to a two-week low on liquidity need due to
stock market losses and after worsening job market data dashed
hopes of an inflation-driven gold rally in the near term.
U.S. stock markets broadly slid over 3 percent, with the
Dow Jones industrial average index falling nearly 300 points as
a bleak U.S. private-sector job report by ADP added to signs
that the recession is deepening. []
"It's hard to determine whether it's just a panic in the
(gold) futures, or people are just trying to cash out to meet
margin calls as funds are liquidating," said John March, chief
technical analyst of precious metals dealer Superior Gold.
Traders also cited chart-based selling as bullion has
repeatedly failed to break above technical resistance above
$885 an ounce.
Spot gold <XAU=> was at $840.00 an ounce at 1:45 p.m. EST
(1845 GMT), down 2.7 percent from the last trade of $863.35 on
Tuesday. Earlier it touched a two-week low of $834.80.
Gold for February delivery <GCG9> settled down $24.30, or
2.8 percent, to $841.70 an ounce on the COMEX division of the
New York Mercantile Exchange.
Spot silver <XAG=> tracked gold lower to a last quote of
$11.09 an ounce, down 3.1 percent from its previous session
close of $11.44.
"What we see are worries of further (gold) price declines.
The unemployment data confirms a lackluster and disinflationary
environment, which is really undermining gold and silver," said
James Steel, chief commodity analyst at HSBC.
Tumbling oil prices are also weighing on gold. U.S. crude
futures <CLc1> dropped almost $6 to end below $43 per barrel
as oil inventory data showed a large rise in U.S. crude stocks.
[]
Experts predicted gold would benefit in the long term from
falling interest rates, which cut the opportunity cost in
holding gold, and uncertainty over the global economic
outlook.
Demand for the precious metal to back exchange-traded funds
remained 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 No. 7
holder of gold worldwide, Commerzbank said.
Superior Gold's March said buying of physical gold coins
and bars remained strong, and he expected bullion, especially
gold coins, to outperform stocks in the longer term.
Traders awaited economic data including key U.S. non-farm
payrolls data on Friday.
PLATINUM HITS 3-MTH HIGH
Platinum 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.
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 last quoted at $976.00 an ounce, 1.1
percent higher than its last finish of $965.50 an ounce.
The precious metal's resilience to the ailing car market
has boosted hopes its price slide may be over, 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=> last
traded at $196.00 an ounce, essentially flat compared with its
previous close on Monday.
(Editing by David Gregorio)
