(Updates prices, adds activity in physical market)
By Lewa Pardomuan
SINGAPORE, April 16 (Reuters) - Gold dropped on Wednesday
as buying interest subsided after an oil-fuelled rally the
previous day, and dealers expect volatility to persist with a
firming U.S. dollar weighing on sentiment.
Gold <XAU=> traded at $924.40/925.20, below late New York
levels of $927.60/928.40. It was backing away from an intraday
high of $936.50 on Tuesday when oil hit a record high above
$114 a barrel, lifting gold's appeal as a hedge against
inflation.
Bullion powered to a record high of $1,030.80 an ounce on
March 17 but tumbled to a two-month low of $872.90 in early
April in the downdraft of a broad commodities sell-off. It has
firmed since then, but is struggling to retest a key resistance
of $950.
"You couldn't rule out the possibility of a return to the
$800s. With gold and with other metals, you should never say
never," said David Moore, an analyst at Commonwealth Bank of
Australia in Sydney.
"If the Fed does cut rates further, that would be, I think,
a supportive factor for the gold price," he said.
Gold has risen more than 20 percent this year on
speculative buying ignited by rising oil prices and
expectations of further U.S. interest rate cuts, which reduce
the dollar's strength.
But the dollar is finding support now, raising the price of
gold for buyers using currencies other than the dollar.
The euro fell to $1.5782 <EUR=>, moving away from a record
high of $1.5915 hit on Thursday, after surprisingly robust U.S.
inflation and manufacturing data suggested the Federal Reserve
may be less aggressive in cutting interest rates.[]
Data on U.S. consumer prices for March will be released on
Wednesday, with markets expecting a core CPI reading of 0.2
percent for the month and 2.4 percent year-on-year -- above the
Fed's comfort zone.
In the physical sector, dealers noted light buying from
jewellers in India and Vietnam but Indonesia stayed on the
sidelines after being a seller in the lat few days.
"I guess people are waiting for tonight's data. I would say
trading is rangebound at the moment after it failed to stay
above $930," said a dealer in Singapore.
Oil <CLc1> hovered around $113 a barrel on Wednesday, ahead
of U.S.government data that may show another decline in
gasoline anddistillate inventories.
Gold futures for June delivery <GCM8> on the COMEX division
of the New York Mercantile Exchange fell $3.6 an ounce to
$928.3.
"When all players are already long, there's no-one left to
buy gold unless the price is coming down," said a dealer in
Singapore.
"However, any pullback might be quickly recovered. I expect
a volatile range of between $905 and $940 an ounce."
In other precious metals, silver fell below New York
levels, platinum hovered below $2,000, while sister metal
palladium bounced.
Precious metals prices at 0401 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 924.60 -3.40 -0.37 11.04
Spot Silver 17.77 -0.07 -0.39 20.31
Spot Platinum 1958.00 -12.00 -0.61 28.82
Spot Palladium 450.00 3.00 +0.67 22.28
TOCOM Gold 3044.00 -5.00 -0.16 -0.52
16607
TOCOM Platinum 6259.00 -61.00 -0.97 17.23
13116
TOCOM Silver 585.80 1.70 +0.29 8.28
232
TOCOM Palladium 1504.00 -30.00 -1.96 11.32
816
Euro/Dollar 1.5785
Dollar/Yen 101.68
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)
