Corrects headline to "Gold drops as dollar rebounds" instead
of "Gold turns higher ad dollar down"
* Dollar recovers from year-low against euro
* Expected dollar weakness limits further losses
* Russia mulls sale of 20-50 tonnes of gold
(Recasts, updates comments, closing prices, market activity,
adds NEW YORK to dateline)
By Frank Tang and Rebekah Curtis
NEW YORK/LONDON, Oct 23 (Reuters) - Gold dropped in choppy
trade on Friday as the dollar rebounded against a basket of
currencies after a strong U.S. housing report and bleak U.K.
economic data.
Despite a rising dollar, gold's losses were limited as
investors still see the precious metal as a hedge against
global currency depreciation which threatens the value of paper
assets.
"We are going to end the week at $1.50 (euro vs dollar),
the expectations are still for a weaker dollar, which is why
gold has not fallen that much," said James Steel, chief
commodities analyst at HSBC in New York.
A weaker dollar boosts interest in gold as a hedge, while
making gold less expensive for buyers using other currencies.
The euro advanced 1 percent against the dollar this week,
rising 2.7 pct so far in October.
Gold <XAU=> was at $1,053.65 an ounce at 2:04 p.m. EDT
(1804 GMT), down from $1,060.00 late in New York on Thursday.
During the session, gold rose to a high of $1,067.30,
slightly below its all-time high of $1,070.40 set on Oct. 14.
U.S. December gold futures <GCZ9> settled down $2.20 at
$1,056.40 an ounce on the COMEX division of the New York
Mercantile Exchange.
Steel said the gold market would remain volatile since
prices were in uncharted territory.
The greenback got a lift from a survey showing sales of
existing U.S. homes rose last month to a two-year high. []
News that the British economy contracted more than expected in
the third quarter also boosted the dollar. []
But analysts said the dollar is likely to fall further,
which should support gold.
Also pressuring gold, oil slipped to just above $80 a
barrel on Friday, amid fears the rally that took it to year
highs of $82 a barrel this week were overdone. []Oil High
oil prices tend to benefit gold, seen as an inflation hedge.
RUSSIA PLANS GOLD SALE
The Russian government wants to sell 20-50 tonnes of gold
from state repository Gokhran this year, a source familiar with
the matter told Reuters. [] The market did not
react strongly to the news, which bucks the trend for central
banks retaining gold as a portfolio diversifier.
"People are looking more to the medium to long term, and
the fact that it looks like central banks could become net
buyers (of gold) in 2009," said Mark O'Byrne, director of
bullion dealer GoldCore.
Meanwhile a senior industry official said Turkey's gold
imports would fall by more than two thirds to a historic low of
less than 50 tonnes this year on record bullion prices and an
increase in sales of scrap. []
Among other precious metals silver <XAG=> was at $17.62
against $17.65.
Platinum <XPT=> was at $1,354.50 from $1,365 and palladium
<XPD=> was at $333.50 from $334, its previous session's late
quote.
Close Change Pct 2008 YTD
Chg Close % Chg
US gold <GCZ9> 1056.40 -2.2 -0.2 884.3 19.5
US silver <SIZ9> 17.723 0.178 1.0 11.295 56.9
US platinum <PLF0> 1369.50 -0.40 0.0 941.50 45.5
US palladium <PAZ9> 339.45 -0.30 -0.1 188.70 79.9
Prices at 2:07 p.m. EDT (1807 GMT)
Gold <XAU=> 1053.45 -6.55 -0.6 878.20 20.0
Silver <XAG=> 17.64 -0.01 -0.1 11.30 56.1
Platinum <XPT=> 1355.00 -10.00 -0.7 924.50 46.6
Palladium <XPD=> 333.50 -0.500 -0.1 184.50 80.8
Gold Fix <XAUFIX=> 1061.75 0.50 0.0 836.50 26.9
Silver Fix <XAGFIX=> 17.65 10.00 0.6 14.76 19.6
Platinum Fix <XPTFIX=> 1372.00 3.00 0.2 1529 -10.3
Palladium Fix<XPDFIX=> 338.00 3.00 0.9 365.0 -7.4
(Additional reporting by Jan Harvey in London; Editing by
David Gregorio)
