* Gold benefits as dollar index falls <.DXY>
* India gold imports up from August, down from last year
* SPDR holdings unchanged, long position concern remains
(Updates prices, adds analyst comment)
By Rebekah Curtis
LONDON, Sept 30 (Reuters) - Gold rallied to test the $1,000
an ounce psychological marker on Wednesday, as dollar weakness
helped the metal stay on track for its best quarterly
performance since early 2008.
However the metal struggled to maintain gains above $1,000
an ounce, with the extent of long positioning still a concern.
Analysts said that left prices exposed to sharp losses before a
fresh attempt at the March 2008 record high at $1,030.80.
Spot gold <XAU=> stood at $997.30 per troy ounce by 1431
GMT, compared with $990.70 quoted late in New York on Tuesday,
as the dollar fell against a basket of major currencies <.DXY>.
U.S. COMEX gold futures for December <GCZ9> rose $3.00 at
$997.30 per ounce.
A weaker dollar makes gold and other commodities priced in
the U.S. currency cheaper for non-U.S. investors.
"A lot of what we've seen today is tied to the dollar
weakening, but gold is still vulnerable," said Calyon metals
analyst Robin Bhar, also noting poor physical market activity
and flows of scrap gold.
"This suggests we need to come back and explore the downside
again," he added.
Bullion has risen some 7.6 percent in the past three months
while the dollar has shed more than 4 percent over the same
period.
The metal is on track to close its best quarterly
performance since the first quarter of last year. Gold prices
have gained around 14 percent so far this year, also bolstered
by technical momentum and concerns about potential inflation.
Speculative positioning is a concern, however, with record
long positions on the U.S. COMEX gold futures market for three
consecutive weeks.
INDIA IMPORTS SUBDUED
India's gold imports in September were provisionally around
35-40 tonnes, up from August but down by more than a quarter
from 54 tonnes a year ago, the head of the Bombay Bullion
Association said. []
The physical market is gathering some support in India as
jewellery demand picks up in the run-up to the festive period,
but current prices are a stumbling block.
"Gold is hardly cheap at the moment. We expect scale-down
Indian demand should gold correct further, but very strong
buying would probably require a gold price close to $900/oz,"
UBS metals analyst John Reade said.
On the investment front the world's largest gold-backed
exchange-traded fund, the SPDR Gold Trust <GLD>, said its
holdings stood at 1,094.107 tonnes as of Sept. 29, unchanged
from the previous business day. <XAUEXT-NYS-TT>
VTB capital said in a note to clients that it expected gold
prices to stay fairly close to current levels, with support at
$984 -- roughly near the low hit late last week.
"However, potentially more gains in the dollar index would
depress the market towards $976/975 on a sustained break below
$984," VTB added.
Among other precious metals silver <XAG=> traded at $16.25
from $16.11, platinum <XPT=> was at $1,280 from $1,267 and
palladium <XPD=> traded at $290.50 from $285.
(Additional reporting by Veronica Brown)
(Editing by Keiron Henderson)
