* Gold drops for third straight day
* Fall driven by dollar movements amid credit worries
* SPDR gold ETF <XAUEXT-NYS-TT> holdings unchanged
(Updates prices)
By Miho Yoshikawa
TOKYO, May 28 (Reuters) - Gold inched down on Thursday,
posting its third straight day of losses, as a steady dollar
dulled some of bullion's sheen, but it remained within the
previous session's range on weaker equities.
Market participants said gold was moving inversely to the
U.S. dollar, and that any bounce in the greenback was likely to
weigh on the precious metal, as investors view gold as a
currency hedge.
"(Gold's direction at the moment) really depends on how the
dollar pans out, especially after the bout of selling on
concerns that the U.S. credit rating may be affected by the
large amount of debt the U.S. has," said Adrian Koh an analyst
at Phillip Futures.
Moody's Investors Service affirmed its top credit rating
for the United States on Wednesday, but warned that if the U.S.
failed to reduce current debt levels once economic growth
returns, the credit grade could eventually come under pressure.
[].
Gold <XAU=> was at $947.40 per ounce at 0552 GMT, down 0.1
percent from New York's notional close of $948.10.
U.S. gold futures for June delivery <GCM9> were at $947.40,
down 0.6 percent from settlement on the COMEX division of the
New York Mercantile Exchange.
The dollar held steady against the euro on Thursday, having
pulled up from five-month lows hit against the single European
currency last week due to short-covering. []
The dollar gained 1.2 percent against the yen to 96.46 yen
<JPY=>.
A spike in U.S. Treasury yields triggered a selloff in
equity markets on Wednesday, as investors feared rising funding
costs might delay a potential recovery in the world's largest
economy. []
Phillip Futures' Koh said he believed gold had the
potential to move higher from a technical point of view.
"I am still positive on gold should we head higher and
break above the previous highs of $960," he said.
"However, for that to happen, the $940 support will have to
hold and if it doesn't, then we may see a continuation of the
retracement in gold prices," he said.
The world's largest gold-backed exchange-traded fund, the
SPDR Gold Trust <GLD>, said its holdings stood at 1,118.76
tonnes as of May 27, unchanged from the previous day.
[]
Gold markets seem to have largely factored in news that
General Motors Corp <GM.N> appears close to a bankruptcy
filing, which would be the largest ever for a U.S. industrial
company.
On Wednesday, GM said a bond exchange offer had failed to
win support from investors holding $27 billion of its debt.
[] []
However, the report has weighed on platinum <XPT=> and
palladium <XPD=>, which are affected by news from the auto
industry due to their heavy use as autocatalysts, needed to
clean exhaust fumes.
Precious metals prices at 0555 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 947.45 -0.65 -0.07 7.65
Spot Silver 14.77 0.05 +0.34 30.48
Spot Platinum 1127.00 -4.50 -0.40 20.92
Spot Palladium 222.00 0.00 +0.00 20.33
TOCOM Gold 2949.00 34.00 +1.17 14.61
32560
TOCOM Platinum 3524.00 33.00 +0.95 32.88
9507
TOCOM Silver 454.10 12.80 +2.90 42.22
276
TOCOM Palladium 704.00 -7.00 -0.98 28.00
314
Euro/Dollar 1.3826
Dollar/Yen 96.43 TOCOM prices in yen per gram, except
TOCOM silver which is priced in yen per 10 grams. Spot prices
in $ per ounce.
(Additional reporting by Chikako Mogi; Editing by Ben Tan)
