* 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> steady
By Chikako Mogi
TOKYO, July 21 (Reuters) - Gold prices steadied near $950 an
ounce 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 outlook for the economy and financial sector 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 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 $948.70 per ounce as of 0554 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.
Japanese markets were closed on Monday for a national holiday.
U.S. gold futures for August delivery <GCQ9> were also little
changed at $948.90 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 on Monday 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 <.DXY> on Tuesday, after hitting a six-week low
against the euro of $1.4250 <EUR=> 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," Yamamoto said.
"In the near term the recovery in investor risk appetite will
likely continue, although there's 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
continues 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 0601 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 949.05 0.70 +0.07 7.83
Spot Silver 13.66 0.04 +0.29 20.67
Spot Platinum 1187.50 7.50 +0.64 27.41
Spot Palladium 252.00 0.00 +0.00 36.59
TOCOM Gold 2878.00 45.00 +1.59 11.85 29567
TOCOM Platinum 3604.00 74.00 +2.10 35.90 9190
TOCOM Silver 414.50 13.60 +3.39 29.82 132
TOCOM Palladium 777.00 23.00 +3.05 41.27 211
Euro/Dollar 1.4210
Dollar/Yen 93.98
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
(Additional reporting by Risa Maeda; Editing by Michael Watson)
