* Gold may stay capped ahead of month-end, U.S. Q2 GDP
* Holdings by SPDR Gold ETF fall 0.3 pct <XAUEXT-NYS-TT>
By Risa Maeda
TOKYO, July 29 (Reuters) - Gold firmed on light physical
buying on Wednesday, paring the previous day's slump on receding
risk tolerance after a weak U.S. confidence reading suggested
consumer demand would languish for some time to come.
Oil and share prices were also beaten down by faltering
confidence on Tuesday, but the dollar rose on increased demand
for safe-haven assets, making gold less attractive.
Gold has become increasingly reliant on the dollar for
direction recently. When the dollar weakens, gold and other
dollar-priced commodities become cheaper for holders of other
currencies.
"The uptrend is not yet much damaged because the market is
still holding around the $938 to $935 level. We can see some
reasonable buying interest there," said Louis Lok, a senior
dealer at Bank of China in Hong Kong.
Spot gold <XAU=> was at $938.80 an ounce at 0336 GMT, up 0.2
percent from New York's notional close of $936.65 on Tuesday,
when it touched a low of $933.70, the lowest since July 17.
U.S. gold futures for August delivery <GCQ9> were almost flat
at $938.90 an ounce. On Tuesday the contract tumbled $14.40 on
the COMEX division of the New York Mercantile Exchange.
Gold bullion, together with oil and share prices, had been
supported by economic optimism and neared $960 on Monday, the
highest level since June 11.
But a rapid rise in long futures positions recently has made
the gold market vulnerable to falls, traders said.
"Profit-taking hit the market yesterday. But if not yesterday
it could have been at anytime ahead of the month-end and U.S.
second-quarter GDP data on Friday," said Shuji Sugata, a manager
at Mitsubishi Corp Futures and Securities' research section.
"Gold is being underpinned above the 25-day moving average
for now, but I don't think a quick turnaround is likely," he
said. The 25-day moving average stood at around $934.
In other markets, crude oil prices <CLc1> dropped below $67 a
barrel on Wednesday, extending the previous day's decline. []
Regional equities markets were mostly lower, with the MSCI
Asia-Pacific index excluding Japan <.MIAPJ0000PUS> falling 1
percent.
But gold mostly took these in stride as it now has a higher
correlation with the euro/dollar rate than with other markets,
traders said.
The euro edged up toward $1.42 <EUR=> after falling 0.5
percent on Tuesday, when the dollar recovered from its lowest
level of the year against a basket of currencies. []
Investment in exchange-traded funds was sluggish, with
holdings by the world's largest gold-backed exchange-traded fund
falling for the first time since July 22.
The SPDR Gold Trust <GLD> said holdings fell 3.36 tonnes or
0.3 percent to 1,083.25 tonnes on July 28 from the previous
business day. []
Precious metals prices at 0327 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 939.40 2.75 +0.29 6.73
Spot Silver 13.65 -0.04 -0.29 20.58
Spot Platinum 1197.50 5.00 +0.42 28.49
Spot Palladium 256.00 -0.50 -0.19 38.75
TOCOM Gold 2859.00 -70.00 -2.39 11.12 29865
TOCOM Platinum 3650.00 -78.00 -2.09 37.63 10233
TOCOM Silver 414.40 -17.00 -3.94 29.78 142
TOCOM Palladium 781.00 -17.00 -2.13 42.00 331
Euro/Dollar 1.4183
Dollar/Yen 94.31
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)
