(Recasts, adds quotes, changes prices, pvs SINGAPORE)
By Atul Prakash
LONDON, April 8 (Reuters) - Gold slipped on Tuesday as a
drop in oil prices prompted investors to take profits from recent
highs, but the market appeared to ignore news that the
International Monetary Fund planned to sell some of its gold.
Gold <XAU=> fell as low as $917.60 an ounce before rising to
to $922.85/923.5 at 1028 GMT, against $923.70/924.50 late in New
York on Monday, when it jumped to a high at $929.10. It hit a
record high of $1,030.80 on March 17.
"We see some hesitation here, as we had a $920-$950 trading
range that was broken on the downside. The potential to break
higher is still there but it will depend on the euro-dollar,"
said Frederic Panizzutti, metals analyst at MKS Finance.
"We see some slowdown in the physical activity and that's
also putting some pressure on the market. If we manage to move
away for the lower end of the range, then we might see some
upside potential."
Oil fell below $109 a barrel, but was seen supported on
concerns that a refinery problem in Europe will further tighten
fuel supplies in the region.
Gold is generally seen as a hedge against oil-led inflation
and often moves in the opposite direction of the dollar.
The euro firmed against the dollar on expectations that the
European Central Bank would stick to a relatively hawkish
message when it meets in two days' time.
Economists reckon the ECB will not cut rates from 4 percent
until the third quarter, while the Federal Reserve is seen
cutting by at least 25 basis points this month from 2.25 percent
and Japan's rates are set to remain at an ultra-low 0.5 percent.
Lower U.S. interest rates tends to weaken the dollar as
investors switch to other alternative assets, including gold,
for better returns.
IMF GOLD SALES
Panizzutti said the IMF gold sales news was not having any
clear impact. Approval of the U.S. Congress would be needed
before any gold sales could begin, he said.
The IMF agreed on Monday to put its finances on sounder
footing by selling some of its gold and investing the profits in
government and corporate bonds, and possibly equities.
"Should sales be given the go-ahead, we would expect them to
be done in a controlled manner that the market can absorb,
although this is a significant amount," Fairfax investment bank
said in a daily market report.
Under the proposal, still to be approved by the IMF's 185
member countries, an endowment will be created with the sale of
403.3 tonnes of the fund's 3,217 tonnes of gold stocks.
An IMF official said the gold would be sold on the market or
offered to central banks at market prices. The sales would be
coordinated within the European central bank gold agreement
(CBGA), which allows for the sale of 500 tonnes a year.
"Given that the sales would happen over some years and
within the CBGA, this amount, if approved, would be readily
absorbed by the investment and jewellery quarter," said Ross
Norman, managing director of TheBullionDesk.com.
In other metals, spot platinum <XPT=> dipped to $2,015/2,025
an ounce from $2,030/2,040 late in New York on Friday -- well
below a lifetime high of $2,290 hit on March 4 due to mining
disruptions in top producer South Africa.
Silver <XAG=> edged down to $18.04/18.09 an ounce from
$18.06/18.11. It had risen to $18.22 an ounce on Monday, its
highest since March 28. Spot palladium <XPD=> was up $1 at
$451/459 an ounce.
(Reporting by Atul Prakash; editing by Chris Johnson)
