* Euro trims some losses vs euro, supports bullion
* Traders see market supported $980/oz on physical demand
* SPDR Gold holdings <XAUEXT-NYS-TT> unchanged
(Updates prices and comments)
By Humeyra Pamuk
LONDON, Sept 28 (Reuters) - Gold was steady on Monday after
briefly falling below $990 an ounce, as the euro trimmed some
losses versus the dollar, but bullion looked vulnerable to a
long liquidation after it failed to stay above $1,000 an ounce.
Physical demand was also supportive for the precious metal,
traders said, who saw the jewellery demand picking as as the
festive period in India, one of the top gold consumers of the
world, approches.
Spot gold <XAU=> was at $991 an ounce by 1121 GMT, slightly
up from $990.95 an ounce late in New York on Friday, when gold
hit a two-week low of $984.70 an ounce.
"The stronger dollar is the reason which pushed gold below
the $1,000 an ounce level," said Eugen Weinberg, Commerzbank
analyst said. "On the other hand, we'd expect a pick-up in
physical demand if prices decline ahead of the festive season."
Gold's inverse relationship with the dollar over the past
few weeks has become stronger. It is often considered an
alternative asset to the greenback, while a higher dollar makes
commodities expensive for holders of other currencies.
The dollar fell against the yen but rose against
higher-yielding currencies including the euro and the Australian
and New Zealand dollars. But the euro <EUR=> trimmed earlier
losses to trade at $1.4655. []
"The dollar feels like it has to go much lower from where it
is and gold could benefit from that," said Afshin Nabavi, head
of trading at MKS Finance.
Over two weeeks ago, gold hit $1,023.85 an ounce, its
highest in eighteen months, within a striking distance of its
record high of $1,030.80 an ounce struck in March 2008.
BARGAIN HUNTERS
But bullion's failure to stay above $1,020 an ounce level
has disappointed several investors and prompted an unwinding of
long positions, which in the U.S. hit a record high for a third
straight week. [] [] []
"We're seeing some long liqudiation from the speculative
side of the market. The major support is at $975 an ounce,"
Nabavi said.
The non-commercial net long position in gold futures on the
COMEX division of the New York Mercantile Exchange stood at an
all-time high of 236,749 lots for the week ended Sept. 22,
figures from the Commodity Futures Trading Commission showed.
"Having said that the reason why gold is gradually falling
and not crashing is bargain hunters and physical buyers are
picking up the dips," Nabavi said.
U.S. gold futures for December delivery <GCZ9> was up 0.14
percent to $993 an ounce from $991.6 per ounce on the COMEX
division of the New York Mercantile Exchange. On Friday, the
contract fell $7.30.
The world's largest gold-backed exchange-traded fund, the
SPDR Gold Trust <GLD>, said its holdings stood at 1,094.107
tonnes on Friday, unchanged from the previous business day.
<XAUEXT-NYS-TT> []
Silver <XAG=> was lower at $15.96 from $16.00
"Silver is generally vulnerable to Comex profit-taking,"
said analyst John Reade at UBS in a research note. "The fact
that the surge in Comex speculative longs over the past three
weeks has struggled to lift silver prices further flags a
specific downside risk over the coming weeks."
Platinum <XPT=> was at $1,273 from $1,272.5 and palladium
<XPD=> was at $289 from $288.
(Reporting by Humeyra Pamuk, Editing by William Hardy)
