* Stop-loss sell triggered at $950, correction seen near-term
* Gold may get support as some upside seen for euro/dollar
* SPDR gold holdings <XAUEXT-NYS-TT> inch higher
By Chikako Mogi
TOKYO, July 21 (Reuters) - Gold prices steadied near $950 on
Tuesday after hitting a six-week high the day before, with the
dollar continuing to drive bullion as its drop and better U.S.
corporate earnings raised the metal's appeal as an inflation
hedge.
Rising oil prices, a rally in stock markets and a weak dollar
have encouraged investors to take more risks, buying
high-yielding currencies and commodities including gold.
A brighter economic and financial sector outlook has made
investors more aware of future inflation risks, while a weaker
greenback has made dollar-priced gold cheaper for holders of
other currencies.
"Oil, stocks and currencies are all favourable for gold,"
said Ronald Leung, a director at Lee Cheong Gold Dealers in Hong
Kong.
"The economy seems to be stabilising, making people think
about inflation," he said.
But gold, while confirming a floor of just above $900, may
face a correction in the near-term as investors await more clues
to see if the economy is really stabilising, he said, adding that
stop-loss selling hit around $950 was weighing on prices.
Spot gold <XAU=> was at $948.30 as of 0310 GMT, barely moved
from New York's notional close of $948.35. On Monday, gold prices
rose to a six-week high near $955.00 per ounce. Japanese markets
were closed on Monday for a national holiday.
U.S. gold futures for August delivery <GCQ9> were also little
changed at $948.50 per ounce, compared to $948.80 an ounce on the
COMEX division of the New York Mercantile Exchange. The August
contract hit a session peak of $955.40, its loftiest level since
June 12.
U.S. stocks jumped on Monday, driving the S&P 500 to an
eight-month closing high, after CIT Group Inc was thrown a
lifeline to avoid bankruptcy, and investors bet corporate America
would log another strong set of earnings this week. []
The dollar hovered near a six-week low against a basket of
currencies on Tuesday, after hitting a six-week low against the
euro of $1.4250 on trading platform EBS the previous day. []
Masafumi Yamamoto, head of FX strategy Japan at Royal Bank of
Scotland, said the euro was likely to strengthen further, with a
near-term target around $1.43.
"Better-than-expected data and earnings are prompting
investors to buy back risk assets, including the euro. Persistent
talk of diversifying foreign reserves to include non-U.S. dollar
assets is also favourable for the euro," he said.
"In the near-term, recovery in investor risk appetite will
likely continue, although there is a chance that a correction of
such moves could spur dollar buying at some point," he said.
If the euro continues to strengthen, gold could inch higher.
"The dollar remains an important factor. If the dollar
conitnues to weaken, investors will try to see if gold can hold
$955-$960," Leung said.
Investment flows into gold-backed exchange-traded funds were
slow, with holdings at the world's largest gold-backed
exchange-traded fund, the SPDR Gold Trust <GLD>, staying
unchanged at 1,094.54 tonnes as of July 20, after easing slightly
on July 17. []
Precious metals prices at 0325GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 948.00 -0.35 -0.04 7.71
Spot Silver 13.66 0.04 +0.29 20.67
Spot Platinum 1186.50 6.50 +0.55 27.31
Spot Palladium 251.50 -0.50 -0.20 36.31
TOCOM Gold 2870.00 37.00 +1.31 11.54 23458
TOCOM Platinum 3589.00 59.00 +1.67 35.33 6846
TOCOM Silver 412.50 11.60 +2.89 29.19 98
TOCOM Palladium 772.00 18.00 +2.39 40.36 90
Euro/Dollar 1.4205
Dollar/Yen 93.78
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
(Editing by Joseph Radford)
