(Recasts, updates prices, China to be top 2008 gold producer)
By Maryelle Demongeot
SINGAPORE, May 28 (Reuters) - Gold slid below $900 an
ounce for the first time in a month on Wednesday, extending 2
percent losses from the previous day as oil prices fell
sharply.
Gold <XAU=> was quoted at $895.60/896.60 an ounce by 0830
GMT, down more than $10 an ounce from $907.10/908.30 in New
York late on Tuesday.
The sharp fall, which unravelled rises above $910 earlier
in the day, came as oil prices turned sharply lower, adding
losses of close to $2.00 to the already steep $3.34 fall on
Tuesday.
"Oil prices fell and therefore all commodities fell, too.
The price of gold fluctuates with oil prices these days, and it
is very difficult to predict," said Yukuji Sonoda, precious
metals analyst with Tokyo-based Daiichi Commodities.
Front-month U.S. crude for July delivery <CLc1> was down
$1.83 at $127.02 by 0834 GMT, having fallen earlier to
$126.55.[]
Investors use gold as a hedge against inflation, making
bullion's moves closely intertwined with changes in oil prices.
Following suit, platinum prices in Japan fell sharply,
catching up with Tuesday's losses in New York and extending
losses on Wednesday afternoon.
The most actively traded April futures platinum contract
<0#JPL:> fell a daily-limit of 300 yen in the afternoon session
and settled at the day's low of 6,740 yen per gram.
The contract had settled down a mere 3 yen on Tuesday.
"I am not anxious about platinum. This is only a temporary
fall," Sonoda said. "Prices are decided by supply and demand
and demand is strong. Automobile companies will soon enter the
market."
Platinum's major industrial use is in catalysts,
particularly in diesel catalysis, to help cleanse
environmentally damaging fumes from motor exhausts.
The much less liquid August, October, and December platinum
contracts had already hit the 300-yen daily limit during the
morning session.
Spot platinum <XPT=> was quoted at $2,057/2,077 an ounce,
down about $60 late on Tuesday and around $100 an ounce lower
than late last week.
Putting a floor under the fall in gold prices, the dollar
edged down in afternoon Asian trade, slipping as oil prices
steadied.[]
The dollar index was down 0.17 percent at 72.265 by 0841
GMT, erasing earlier gains.
Investors awaited the release of U.S. economic data later
in the day, including the mortgage market index and durable
goods orders, which could influence the dollar.
"Investors will likely remain cautious ahead of the release
of these statistics, which might further fuel dollar weakness
today," Standard Bank said in a daily market report.
A weaker dollar makes gold cheaper for holders of other
currencies and often lifts bullion demand.
In supply news, China, the world's second-largest gold
producer last year, is expected to surpass South Africa and
become the world's top gold producer in 2008 as it raises
output from 270.5 tonnes of gold to 300 tonnes this year, an
executive at industry group the China Gold Association said on
Wednesday. []
Gold futures for June delivery <GCM8> on the COMEX division
of the New York Mercantile Exchange were down $12.00, or more
than one percent, at $895.90 an ounce.
The most active Tokyo gold futures contract <0#JAU:>, for
April, settled 75 yen lower at 3,028 yen per gram, after having
settled 2 yen lower on Tuesday.
Silver and palladium also slipped further on Wednesday in
line with other commodities.
Silver <XAG=> fell to $17.18/17.24 an ounce, down from
$17.41/17.47 late on Tuesday.
Spot palladium <XPD=> was quoted at $436/$442 an ounce,
little changed from $436.50/444.50 late in New York.
Precious metals prices at 0830 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 895.60 -9.20 -1.02 7.55
Spot Silver 17.18 -0.20 -1.15 16.32
Spot Platinum 2057.00 -61.00 -2.88 35.33
spot Palladium 436.00 -0.50 -0.11 18.48
TOCOM Gold 3028.00 -75.00 -2.42 -1.05
42144
TOCOM Platinum 6743.00 -297.00 -4.22 26.30
40392
TOCOM Silver 582.60 -30.30 -4.94 7.69
1108
TOCOM Palladium 1453.00 -71.00 -4.66 7.55
1431
Euro/Dollar 1.5720
Dollar/Yen 104.23
Note - TOCOM prices in yen per gram, except TOCOM silver which
is priced in yen per 10 grams. Spot prices in $ per ounce.
(Reporting by Maryelle Demongeot)
