* Gold has support around $1,330, as buying emerges
* Gold to rebound to $1,351 -technicals []
* Coming up: U.S. Fed Beige book; 1800 GMT
By Rujun Shen
SINGAPORE, Oct 20 (Reuters) - Gold held steady on
Wednesday, after falling nearly three percent in the previous
session following China's surprise interest rate hike, and
prices are supported by bargain-seekers.
China's central bank surprised on Tuesday with its first
increase of interest rates in nearly three years, a move that
reflects concern about resurgent asset prices and could mark
the start of a more aggressive phase of monetary tightening in
the world's fastest-growing major economy. []
The dollar soared at the news, and held steady on Wednesday
morning as investors poised to cut short positions. []
"In the short term, gold will be under pressure, as
investors switch over to the dollar from commodities. In
addition, some investors have chosen to close their positions
after sizeable profit," said Hou Xinqiang, an analyst at Jinrui
Futures in China.
"For gold, we might see a correction taking prices down to
as low as $1,300."
Spot gold <XAU=> was flat at $1,336 an ounce by 0242 GMT.
It fell to a two-week low of $1,334.45 on Tuesday, compared to
an all-time high of $1,387.10 hit last week.
A bout of buying from bargain hunters in the region helped
stabilise prices in early Asian trade, dealers said.
"We are seeing a little bit of bargain-hunting. The market
has not really seen a turnaround, even though there are talks
of correction," said Ronald Leung, a physical dealer at Lee
Cheong Gold Dealers in Hong Kong.
Policy changes in the United States are likely to remain
the most closely watched factor in the market, Leung and others
said.
"So long as the U.S. interest rate stays on the low end,
and China's interest rate doesn't rise too quickly, the market
still has a chance to move higher."
Holdings in the SPDR Gold Trust <GLD> slipped less than one
tonne to a one-week low of 1,300.089 tonnes. []
In other markets, industrial metals pared sharp losses in
early trade. []
"It seems to me there was a very knee-jerk reaction to the
China move across all commodities, and now people are starting
to step back and think about what it actually means for Chinese
growth," said Yingxi Yu, a commodities analyst with Barclays
Capital.
"The answer is probably not much. It's a 25 basis point
increase in an economy that is still growing very strongly. The
actual impact of this rate hike might be limited on the overall
growth story in China. People were just trying to manage their
positions. I don't think fundamentally it changes the demand
story."
Spot silver <XAG=> gained more than half a percent to
$23.45 an ounce, after tumbling 4.2 percent in the previous
session.
Platinum <XPT=> fell to $1,652, its lowest so far this
month, before recovering to $1,666.
Precious metals prices at 0242 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 1336.00 0.00 +0.00 21.93
Spot Silver 23.45 0.13 +0.56 39.33
Spot Platinum 1666.00 -1.50 -0.09 13.57
Spot Palladium 570.25 -2.83 -0.49 40.63
TOCOM Gold 3503.00 -82.00 -2.29 7.49
58526
TOCOM Platinum 4391.00 -62.00 -1.39 0.23
9485
TOCOM Silver 61.60 -2.30 -3.60 19.15
1298
TOCOM Palladium 1500.00 -35.00 -2.28 28.76
274
Euro/Dollar 1.3752
Dollar/Yen 81.34
TOCOM prices in yen per gram. Spot prices in $ per ounce.
(Additional reporting by Alejandro Barbajosa in SINGAPORE;
Editing by Clarence Fernandez)
