* Wary of speculation for backing EMF with gold
* Players may be seeking new comfort zone at lower levels
By Chikako Mogi
TOKYO, March 15 (Reuters) - Gold prices rebounded on Monday
from a two-week low hit late last week, but remained pressured by
wariness over speculation European authorities may use their vast
gold reserves to help euro zone states facing fiscal problems.
Gold prices fell below $1,100 per ounce on Friday to their
lowest level since Feb. 25, as investors unwound positions on
speculation of further monetary tightening by China while
uncertainty over Europe's sovereign debt worries spurred heavy
futures liquidation.
Germany's Bundesbank would oppose any government initiative
to use its gold reserves as backing for a European Monetary Fund,
a spokeswoman said. []
German magazine Focus reported on Saturday that the finance
ministry was considering the possibility of euro zone countries
using their central banks' gold reserves to back such a fund. "A
proposal from the finance ministry suggests pooling the gold
reserves of the former central banks of euro zone countries in a
stabilisation fund," Focus wrote. []
"Gold prices are likely to be capped in the near term with
worries about European central banks selling gold to help
Europe's fiscal problems," said Kazuhiko Saito, chief analyst at
Tokyo's Fujitomi Co Ltd.
He said big European countries such as Germany and France
each hold about 60 percent of their reserves in gold, and market
players wondered what might come out of a two-day meeting of the
European Union Economic and Financial Affairs Council starting in
Brussels on Monday.
"Investors are seeking a new comfort zone at a lower level,"
he said. "Asian buyers continue to provide support below $1,100,
but they are also quick to sell on rebounds in prices," he said.
Spot gold <XAU=> inched up 0.4 percent to $1,104.00 an ounce
as of 0200 GMT, against New York's notional close of $1,099.50.
U.S. gold futures for April delivery <CGJ0> were at $1,104.20
an ounce, up 0.2 percent compared with $1,101.70 on the COMEX
division of NYMEX.
Traders also cited a series of central bank policy meetings
this week as making investors cautious about buying gold.
The Federal Reserve is expected to repeat its promise to keep
U.S. borrowing costs exceptionally low for an "extended period"
when it concludes a policy-setting meeting on Tuesday.
[]
The Bank of Japan, which ends a two-day meeting on Wednesday,
is under government pressure to further ease policy to help beat
deflation and prevent a stronger yen from hindering the economy's
recovery. []
Noncommercial net long U.S. gold futures positions inched up
0.4 percent to 208,194 contracts in the week ended March 9 from
207,372 contracts a week earlier, according to the weekly
Commitments of Traders report published by the Commodity Futures
Trading Commission. It was the highest in five weeks.
[]
As an increase in speculative positions slowed, investment
flows has also paused.
The world's largest gold-backed exchange-traded fund, SPDR
Gold Trust <GLD>, said its holdings stood at 1,115.511 tonnes as
of March 12, unchanged from the previous business day. Holdings
have stayed unchanged for three consecutive days. []
The dollar reversed earlier losses to edge higher, and was up
0.1 percent against a basket of currencies. The dollar dropped to
a one-month low against the euro and a two-week trough against
sterling on Friday, as investors pared back large bearish bets on
the two European currencies following strong euro zone economic
data. []
Precious metals prices at 0204 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 1103.70 4.20 +0.38 0.73
Spot Silver 17.04 0.02 +0.12 1.25
Spot Platinum 1603.50 -1.00 -0.06 9.30
Spot Palladium 457.75 -2.25 -0.49 12.89
TOCOM Gold 3228.00 -24.00 -0.74 -0.95 20990
TOCOM Platinum 4657.00 -21.00 -0.45 6.30 11722
TOCOM Silver 50.20 -0.40 -0.79 -2.90 368
TOCOM Palladium 1337.00 5.00 +0.38 14.76 209
Euro/Dollar 1.3739
Dollar/Yen 90.66
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
(Editing by Michael Watson)
