(Recasts, adds quotes, closing prices, market activity, byline
and NEW YORK to dateline)
By Frank Tang and Atul Prakash
NEW YORK/LONDON, March 6 (Reuters) - Gold retreated from
record highs on Thursday as investors took profits, but the
precious metal held within striking distance of $1,000 a troy
ounce as the dollar struck an all-time low against the euro.
Spot gold <XAU=> jumped as high as $991.90 an ounce and was
at $976.20/976.95 at 2:15 p.m. EST (1915 GMT), up from an
earlier low of $959.45, but still lower than $985.70/986.50
late on Wednesday in the U.S. market.
Platinum group metals finished sharply lower amid a
broad-based metals pullback after top producer South America
said it will let mines increase power consumption as the
country's power crisis had stabilized.
"Guess some speculators just got cold feet, maybe after the
news that power deliveries to mines in South Africa are going
to be raised to 95 percent," said Wolfgang Wrzesniok-Rossbach,
head of marketing at precious metals group Heraeus.
South Africa said it will let mines increase power
consumption from 90 to 95 percent of normal because the
country's power crisis has stabilised. []
Traders said heavy profit-taking in thin markets were
behind the fall in bullion prices.
"This is as simple as profit taking. The gold market is
divorcing itself from the emotions and movements of the other
markets," said George Nickas, precious metals broker of FC
Stone in New York.
"People are just taking a temporary time-out. There is no
fundamental news, and there are no technical signals to hang
your head on," Nickas said.
Analysts still expect gold to break through the $1,000
level, but think it may take several forays.
Gold has gained nearly 20 percent in 2008 as funds,
speculators and investors poured money into precious metals on
expectation of further interest rate cuts in the United States
and record-high oil, which lift its safe-haven appeal.
The dollar fell to lifetime lows against the euro after ECB
President Jean-Claude Trichet said euro zone inflation risks
were on the upside, dashing hopes of an interest rate cut in
the near future.
News that U.S. home foreclosures and the rate of homes
entering the foreclosure process rose to record highs added
bearish investor sentiment towards the greenback.
Returns on U.S. holdings are eroding for foreign investors
and many see precious metals as hard assets that can protect
portfolios.
FOREGONE CONCLUSION
In overnight sessions, silver struck a 27-year high above
$21 on strong speculative buying, platinum traded below an
historical peak and U.S. gold futures held just near record
highs around $995 an ounce.
However, the active U.S. gold contract for April delivery
<GCJ8> settled down $11.40 or 1.2 percent to $977.10 an ounce.
"It's an investor-driven story, with the investor demand
coming from U.S. dollar weakness. I can't see the trend abating
anytime soon, with all the drivers of gold remaining in place,"
said Daniel Hynes, metals strategist at Merrill Lynch.
"Also, inflation concerns seem to be rising on a daily
basis and that certainly bodes well for gold ... $1,000 is a
foregone conclusion now."
The dollar's decline has been exacerbated by weak U.S.
economic data and worries about a recession, which has
galvanised the U.S. Federal Reserve to cut borrowing costs
sharply to 3 percent, with further easing expected to come.
Gold has also jumped in other currencies, which is often
seen as a bullish sign. The metal quoted in euros <XAUEUR=R>
was at 644 euros an ounce, below this week's record high of
649.85 euros. It was also last at 489 sterling <XAUGBP=R>,
versus Monday's record of 497.55 sterling.
Platinum <XPT=> was down at $2,170/2,180 an ounce against
$2,240/2,247 late in New York on Wednesday. It hit a record
high of $2,290 this week on supply concerns following power
problems in South Africa, the world's top producer.
Mines in South Africa, have been operating at 90 percent of
their usual power since late January after electricity
shortages forced the mining sector to shut down for five days.
Silver <XAG=> was last at $20.18/20.23, versus $20.61/20.66
at Wednesday's close late in New York. Spot palladium <XPD=>
fell more than 5 percent to below $520 and was last at $513/516
an ounce from its previous U.S. finish of $552/556.
(Additional reporting by Pratima Desai; Editing by Marguerita
Choy)
