(Recasts, adds quotes, changes prices, pvs SINGAPORE)
By Atul Prakash
LONDON, April 29 (Reuters) - Gold fell as the dollar rose on
Tuesday, with weaker oil prices also prompting investors to
unwind their trading positions ahead of this week's Federal
Reserve meeting on U.S. interest rates.
Gold often takes its cue from movements in the dollar
because of its role as an alternative investment to currencies,
stocks and bonds. The outcome of the Fed meeting would set the
tone for currencies and precious metals, dealers said.
Spot gold <XAU=> fell to $886.05/886.80 an ounce at 1015 GMT
from $891.65/892.65 late in New York on Monday, when it hit an
intraday day high of $895.50 on speculative buying driven by
record high oil.
"Strength in the U.S. dollar is clearly a major factor, plus
we have seen a quite bit of money coming out of the StreetTRACKS
exchange-traded fund. Both these things are weighing on the
market," said Dan Smith, analyst at Standard Chartered Bank.
"There is some indication of consumers starting to come back
in at these lower prices, but we are waiting to see how powerful
that would be. I am looking for prices to recover somewhat from
where we are now," he said.
Gold held in StreetTRACKS Gold Shares, the world's largest
gold-backed ETF, fell more than 50 tonnes in less than a week to
about 591 tonnes as of Monday.
The euro fell to a four-week low versus the dollar, dented
by soft European sentiment data and weak bank earnings results,
while the greenback gained from a view that the U.S.
rate-cutting cycle may be near its end. []
The Fed is widely seen as cutting rates by 25 basis points
to 2.0 percent but there is growing speculation this will be the
end of their easing campaign.
A firmer dollar makes gold costlier for holders of other
currencies and often lowers bullion demand. The metal is also
generally seen as a hedge against oil-led inflation.
Oil fell towards $118 a barrel on Tuesday after hitting a
record a day ago as the Grangemouth refinery in Scotland
reopened from a two-day strike that had shut down a pipeline
that carries about half of Britain's crude supply.
FED DECISION AWAITED
"Gold is holding reasonably steady close to $890/oz as
investors wait for the U.S. Fed's decision on interest rates.
Expectations are that the Fed will signal an end to rate cuts,
which will drag down gold prices," Fairfax investment bank said.
Spot gold has been trading well below its lifetime high of
$1,030.80 an ounce hit on March 17, with attempts to revisit the
level resulted in heavy profit-taking by investors.
Gold futures for June delivery <GCM8> on the COMEX division
of the New York Mercantile Exchange fell $7.5 an ounce to $888.
Trading was thin overnight, with Japanese players away for a
holiday.
In industry news, one mineworker was killed and two were
trapped underground at Gold Field's <GFIJ.J> number 10 shaft at
Driefontein mine after a seismic event, the National Union of
Mineworkers said, adding two workers were admitted to hospital
in a critical condition. []
Aquarius Platinum Ltd <AQP.AX> said it had completed the
repurchase of Impala Platinum's <IMPJ.J> stakes for a total
consideration of $504.9 million. Impala is the world's second
biggest platinum producer. []
Other precious metals also fell, with spot platinum <XPT=>
slipping more than 1 percent to $1,941.50/1,951.50 an ounce from
$1,964.50/1,974.50 late on Monday.
Silver <XAG=> fell to $16.79/16.84 from $16.96/17.02 an
ounce, while palladium <XPD=> dropped to $427/433 an ounce from
$432.50/438.50 in the U.S. market late on Monday.
(Reporting by Atul Prakash; editing by Chris Johnson)
