(Recasts, adds analyst comments, closing prices, market
activity, adds NEW YORK to dateline)
By Frank Tang and Atul Prakash
NEW YORK/LONDON, April 24 (Reuters) - Gold slipped 2 percent
to a three-week low below $900 an ounce on Thursday after the
dollar bounced against the euro, prompting bullion investors to
switch funds from hard metals to other assets.
Spot gold <XAU=> fell as low as $884.25 an ounce and was at
$885.25/886.45 at 2:15 p.m. EDT (1815 GMT), down from
$905.50/906.70 late in New York on Wednesday.
U.S. gold futures for June delivery <GCM8> settled down
$19.60, or 2.2 percent, at $889.40 an ounce.
"Some funds were pretty long and they used oil and currency
moves to get rid of some long positions. The physical take-off
was also not that big," said Michael Kempinski, senior precious
metals trader at Commerzbank.
"It's a very thin and nervous market at the moment. The
upside technical trend has also been broken and that's why the
selling pressure is still on."
The dollar rose broadly after government data showed signs
of resilience in the U.S. labor market, hurting gold's appeal as
a hedge against the falling U.S. currency.
In contrast, demand for the euro slid after a reading on
German business sentiment showed the biggest monthly fall since
September 2001, denting confidence in the euro zone economy.
A firmer dollar makes gold costlier for holders of other
currencies and often lowers bullion demand. The metal is also
generally seen as a hedge against oil-led inflation.
Oil briefly dropped below $115 a barrel as the dollar
firmed and investors booked profits after crude rallied to a
record high earlier this week.
"Gold has broken some important technical levels today. Much
depends on the outcome of the Fed meeting next week and the data
flow from the U.S.," said David Thurtell, analyst at BNP
Paribas.
"I'm confident that there will be decent support in the high
$800s," he added.
In industry news, Newmont Mining Corp <NEM.N> Chief
Executive Richard O'Brien said the price of gold could reach
$1,100 an ounce in 2008. The world's second-largest gold
producer posted a sharp rise in profit and still forecast gold
sales between 5.1 million and 5.4 million ounces for the year.
The Federal Reserve's next policy meeting is due on April
29 to 30 and investors believe it will cut its benchmark
overnight rate by a further quarter percentage point, to 2
percent. Lower interest rates boost gold's appeal as an
alternative investment.
Spot platinum <XPT=> fell as low as $1,962 an ounce and was
last at $1,961/1,971, versus $1,991.50/2,001.50 late in the U.S.
market on Wednesday.
The market came under pressure after Mitsui Mining and
Smelting Co Ltd <5706.T> said it has developed a new catalyst
for diesel engine cars that replaces platinum with much-cheaper
silver. []
But precious metals consultancy GFMS Ltd said in a report
that platinum may spike to a record high of $2,400 an ounce this
year as the investment climate continues to be positive and
fundamentals remain strong. []
Palladium was likely to trade in a broad trading range of
$400-$550 an ounce in 2008, as demand from autocatalyst and
jewelry makers was seen improving, the report said.
Spot palladium <XPD=> fell to $435.50/441.50 per ounce from
$441.50/447.50, while silver <XAG=> was down at $16.71/16.81 an
ounce, against $17.14/17.20 late in New York on Wednesday.
(Editing by Matthew Lewis)
