* Little reaction to N. Korea tension
* SPDR gold ETF <XAUEXT-NYS-TT> holdings unchanged
By Risa Maeda
TOKYO, May 26 (Reuters) - Gold eased on Tuesday, weighed
down by a recovery in the dollar but just off a two-month high
touched last week.
Trading activity is expected to pick up later when the
London and New York markets reopen after a holiday on Monday.
Spot gold <XAU=> fell 0.5 percent to $953.10 per ounce from
Monday's notional close of $957.80, but just a whisker off the
two-month high above $960 touched last week.
U.S. gold futures for June delivery <GCM9> fell 0.5 percent
to $953.80 per ounce from Friday's settlement of $958.90 on the
COMEX division of the New York Mercantile Exchange.
"Yesterday the markets were closed in London, and in New
York as well. So, some physical selling is back in the market,"
said Dick Poon, manager of precious metals at Heraeus in Hong
Kong.
Gold markets showed little response to a report on Tuesday
that North Korea would launch more short-range missiles.
[]
The North, condemned by the U.N. Security Council for its
nuclear test the previous day, fired off three short-range
missiles from its east coast missile bases on Monday.
[]
Analysts said any impact on gold from geopolitical tensions
on the Korean peninsula would be short-lived as the nuclear
test was not totally unexpected and the Security Council had
decided to start working immediately on a new resolution.
"This is not the first time (North Korea has driven up
tension in the region), so I don't think it's a problem,"
Heraeus' Poon said.
Analysts said the markets were focused on the direction of
the dollar, which edged up but hovered near a five-month low
against a basket of currencies <.DXY> marked last week. []
Gold is often considered an alternative investment to the
dollar.
Currency traders are awaiting U.S. Treasury auctions this
week to test the strength of investor appetite for dollar
assets. The U.S. Treasury will sell two-year notes on Tuesday,
with a series of auctions this week totalling $101 billion.
The amount matches the weekly record set in April, but this
time it comes after rating agency Standard & Poor's said it
might cut Britain's AAA credit rating because of soaring public
debt, stoking fears that the U.S. AAA rating may follow suit.
Technically, gold's fall may gather pace if it falls
through $940 an ounce and triggers stop-loss selling.
But analysts said gold was firmly underpinned around $900
given the risk of a further fall in the dollar.
"It always goes back to the fundamental question of which
is more aggressive in providing liquidity to markets, the U.S.
central bank or the European central bank? And for sure, it's
the U.S. side," said Kaname Gokon, deputy general manager at
Okato Shoji Co's research section.
The world's largest gold-backed exchange-traded fund, the
SPDR Gold Trust <GLD>, said its holdings were at 1,118.76
tonnes as of May 25, when the U.S. markets were closed,
unchanged from May 22. []
Precious metals prices at 0617 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 953.45 -4.35 -0.45 14.50
Spot Silver 14.60 -0.11 -0.75 -1.15
Spot Platinum 1140.00 -9.50 -0.83 -25.00
Spot Palladium 233.00 1.50 +0.65 -36.68
TOCOM Gold 2918.00 -15.00 -0.51 -4.64
24354
TOCOM Platinum 3505.00 -40.00 -1.13 -34.35
9024
TOCOM Silver 443.90 -1.60 -0.36 -17.95
249
TOCOM Palladium 720.00 1.00 +0.14 -46.71
126
Euro/Dollar 1.3968
Dollar/Yen 94.72 TOCOM prices in yen per gram, except
TOCOM silver which is priced in yen per 10 grams. Spot prices
in $ per ounce.
(Editing by Ben Tan)
