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By Frank Tang and Atul Prakash
NEW YORK/LONDON, April 10 (Reuters) - Gold prices closed
lower on Thursday after hitting a 10-day high, as investors
unloaded bullion in late trade after the dollar surged from
lifetime lows against the euro.
Gold could fall further if crude oil prices slide and
strong investment buying disappears, dealers said.
Spot gold <XAU=> climbed as high as $939.40 an ounce before
falling to a low of $922.90. It was at $925.90/926.70 at 2:15
p.m. EDT (1815 GMT), against $932.50/933.30 late in New York on
Wednesday.
"Market sentiment is positive but the metal needs a period
of consolidation," said David Holmes, director of metals sales
at Dresdner Kleinwort investment bank.
"The market is already long gold and we are going to find
another set of investors to take us on the next leg on the
upside," he added.
The dollar surged from record lows against the euro as
traders covered short positions after ECB President Jean-Claude
Trichet's unchanged inflation views failed to give the single
currency upward momentum.
The Bank of England made its third 25-basis-point cut in
five months, bringing its main interest rate to 5 percent. The
ECB left rates on hold at 4 percent.
A weaker dollar makes gold cheaper for holders of other
currencies and often lifts bullion demand. The metal is also
generally seen as a hedge against oil-led inflation.
U.S. crude futures <CLc1> settled down 76 cents at $110.11
a barrel.
Market watchers said investment buying held the key to
gold's near-term direction, but the yellow metal was vulnerable
to more selling pressure.
"As long as gold continues to feed on investor demand, it
will continue to show stability. When that leaves the market
place, we could see another pullback," said George Nickas,
broker at FC Stone in New York.
"I would not be surprised to see some profit-taking step in
as the week concludes, keeping gold in a trading range," he
said.
VOLATILE MARKET
Spot gold hit a record high of $1,030.80 an ounce on March
17, then fell to a two-month low of $872.90 last week in a
broad commodities sell-off. It has recovered since then.
U.S. gold futures for June delivery <GCM8> on the COMEX
division of the New York Mercantile Exchange settled down $5.70
to $931.80 an ounce.
"With such febrile financial markets, and gold ever more
reliant on investment demand as physical markets slow, the
metal is bound to remain volatile," Fortis Bank said in a
report.
"Continuing bad news should support prices, but any signs
from April's G7 meeting of a stronger dollar would be a major
negative," it added.
In industry news, South African gold output fell 28.2
percent year-on-year in February after a power crisis hit the
country's mining sector. []
However, India's gold imports in the year to March 2008
fell 23.4 percent from the year before as prices soared, a top
industry official said. []
Platinum <XPT=> rose to $2,024/2,032 per an ounce from
$2,018/2,025 late in New York on Wednesday.
Palladium <XPD=> rose $2.50 to $458.50/462.50 an ounce, but
silver <XAG=> fell to $17.96/18.01 an ounce from $18.15/18.20
late in New York on Wednesday.
(Editing by David Gregorio)
