* Rebounding dollar triggers light profit-taking
* Underlying support provided by falling equities prices
* GLD holdings down slightly, investment demand seen flat
(Recasts, updates with quotes, closing prices, adds NEW YORK
to dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, May 11 (Reuters) - Gold prices dropped in
quiet trade on Monday as a bounce in the dollar prompted
investors to take profits, but lower global stock markets
limited losses and kept intact the metal's status as a refuge
from riskier investments.
Spot gold <XAU=> was at $913.10 an ounce at 1:36 p.m. EDT
(1736 GMT), down 0.3 percent from its late Friday quote of
$916.05 in New York on Friday.
U.S. gold futures for June delivery <GCM9> settled down
$1.40 at $913.50 an ounce on the COMEX division of the New York
Mercantile Exchange after trading in a narrow range of less
than $10.
Analysts said gold was trapped between opposing forces as
its role as a hedge against economic uncertainty vied with
perceptions from some quarters that the global economic
downturn might be bottoming out.
"We've got a bit of a tug-of-war situation for gold now --
support from dollar weakness but pressure as equities
outperform overall," said Tom Kendall, analyst at Mitsubishi
Corp in London.
"We need a daily close above $919 to turn the technical
picture bullish," he added.
Global stocks as measured by MSCI's all-country index
<.MIWD00000PUS> were 0.7 percent lower on Monday. But they were
working on their third month of gains as investors tried to
determine whether the global economic slump is moderating,
while Wall Street fell over 1 percent.
On the foreign exchange markets, the dollar rebounded from
a four-month low against a basket of currencies <.DXY>, making
dollar-priced bullion pricier for non-U.S. investors.
Frank McGhee, head precious metals trader at Integrated
Brokerage Services, said that gold, which has largely ignored
the U.S. currency's weakness recently, should rise because of
bullion's role as a hedge against a falling dollar.
"At some point of time, gold has to reassert itself and
come back to its true fundamentals -- which is gold as a
currency -- and it has to react to changes in the value of the
dollar," McGhee said.
ETD DEMAND TRICKLES IN
Investment in gold-backed exchange-traded funds remained
lackluster last week.
Holdings of the world's largest gold ETF, the SPDR Gold
Trust <GLD>, edged down 0.36 tonnes in the week to May 8 to
1,104.09 tonnes, while holdings of the three operated by
London's ETF Securities were little changed. []
[]
Gold demand from India, the world's biggest bullion buyer,
slowed to a trickle on Monday, dealers said. []
Buying precious metals to back ETFs has been a significant
source of demand for gold and silver in recent years, traders
said.
Silver <XAG=> tracked gold to end at $13.90 an ounce, down
0.6 percent from its previous finish of $13.98.
Among other precious metals, platinum <XPT=> eased to
$1,114.50 an ounce, down 2.8 percent from its late Friday quote
of $1,145.50, and palladium <XPD=> dropped to $233.50 an ounce,
down 2.1 percent from its previous finish of $238.50, tracking
losses in the industrial metals.
Lonmin <LMI.L>, the world's third-biggest platinum
producer, unveiled a $457 million rights issue to cut its debt.
[]
Investec said the company's guidance was downbeat, with
management saying it is "not planning for any significant
recovery in platinum group metals prices in the next 12
months."
(Reporting by Frank Tang, Jan Harvey and Veronica Brown;
editing by Jim Marshall)
