(Updates prices)
By Lewa Pardomuan
SINGAPORE, March 19 (Reuters) - Gold fell more than 2
percent on Wednesday after a less than expected 75 basis points
interest rate cut by the U.S. Federal Reserve boosted the
dollar, lifted stocks and dimmed bullion's appeal as an
alternative investment.
But bullion's drop stirred up trade in the physical sector,
with jewellers in the region purchasing gold bars from dealers
in Singapore, a centre for bullion trading in Southeast Asia.
Gold <XAU=> hit a low of $980.80 ounce, down from
$1,002.30/1,003.10 an ounce late in New York on Tuesday, when
it tumbled to its lowest in nearly a week at $977.80. It struck
a record at $1,030.80 an ounce on Monday.
Gold has risen more than 23 percent in 2008 on fears of
inflation as crude oil hit records, hopes of further rate cuts
and deepening U.S. financial concerns. Some investors had bet
the Fed could cut by as much as 100 basis points.
"Whilst bullion prices may have suffered overnight, in the
longer term the increasing threat of inflation will help to
support prices and could drive it back towards its recent
all-time high," said Investec Australia in a daily report.
Silver and palladium hovered below recent highs. Platinum
was well below its record high but still supported by
disruptions in power supply in main producer South Africa
[]. The dollar dropped against the yen on
Wednesday as investors booked profits a day after the U.S.
currency posted its biggest one-day gain against the yen in a
decade after the Fed rate cut. []
Lower rates typically reduce the attractiveness of
dollar-denominated securities and curb demand for the dollars
to buy them.Japan's Nikkei share average <> jumped 2.5
percent to track gains on Wall Street after the interest rate
cut.
"It looks like hedge funds are selling, so the market may
go down further for today and tomorrow. I think $1,025 is the
high but it may be difficult to touch, but if gold breaks $996,
then it will be good for the bulls," said a dealer in
Singapore.
Gold futures for April delivery <GCJ8> on the COMEX
division of the New York Mercantile Exchange fell $13.9 an
ounce to $990.4 an ounce, off Monday's record of $1,033.90.
"The market may still go lower but the fall may be limited
because it has always bounced back. Physical demand is very
good. We've got a lot of buyers from Thailand, Vietnam and
Indonesia," said another dealer in Singapore.
Gold bars were on par with spot London prices, steady from
last week <GOLD/ASIA1>.
Spot platinum <XPT=> was at $1,960/1,970 an ounce,
unchanged from late New York levels -- well below an historical
high of $2,290 an ounce hit on March 4.
The most active Tokyo platinum futures <0#JPL:> ended 54
yen per gram higher at 6,045 yen in a technical rebound after
falling by the 300 yen daily limit on Tuesday.
Silver <XAG=> edged up to $19.88/19.90 an ounce from
$19.76/19.81 an ounce. Spot palladium <XPD=> fell to $470/476
an ounce from $477/482 an ounce.
Precious metals prices at 0832 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 990.90 9.40 +0.96 19.00
Spot Silver 19.89 0.23 +1.17 34.66
Spot Platinum 1960.00 0.00 +0.00 28.95
Spot Palladium 470.00 -7.00 -1.47 27.72
TOCOM Gold 3167.00 -1.00 -0.03 3.50
73151
TOCOM Platinum 6045.00 54.00 +0.90 13.22
24305
TOCOM Silver 635.60 2.70 +0.43 17.49
1215
TOCOM Palladium 1517.00 14.00 +0.93 12.29
9752
Euro/Dollar 1.5720
Dollar/Yen 98.55
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
(Editing by Michael Urquhart)
