* Gold could rise, hold $1,000 if it weathers profit-taking
* SPDR Gold holdings <XAUEXT-NYS-TT> down 0.04 percent
By Miho Yoshikawa
TOKYO, Sept 7 (Reuters) - Gold futures dipped a touch on
Monday but stayed just below $1,000 an ounce on buying linked to
a weaker dollar and fears about inflation.
U.S. gold futures for December delivery <GCZ9> were at $993.40
per ounce at 0609 GMT, after settling down $1 at $996.70 on
Friday, when they hit an intraday peak of $998.40.
"The volumes last week that saw it rise were relatively low
... and you might have thought it would be a fragile rise to
these lofty peaks," said Darren Heathcote, head of trading at
Investec Australia.
"The market considers that we could be looking at more
inflation," Heathcote said.
Gold is seen as a hedge against inflation, which erodes the
value of paper assets.
Traders said it was a quiet day with New York commodity
markets closed on Monday due to the U.S. Labor Day holiday.
Spot gold <XAU=> stood at $991.70 per ounce, down 0.2 percent
compared to the New York notional close of $993.40.
Looking ahead, Heathcote said there was a chance gold could
climb above the $1,000 level if it manages to weather a round of
profit-taking.
In a sign of possible falling investor interest, the world's
largest gold-backed exchange-traded fund, the SPDR Gold Trust
<GLD>, said its holdings fell 0.38 tonnes to 1,077.63 tonnes on
Friday. []
The precious metal had rallied last week on the prospect of
falls in stock markets and worries about inflation, with central
banks pumping money into their economies to help fight the global
recession.
But gold was largely unchanged after the U.S. Labor
Department reported on Friday that closely watched nonfarm
payrolls for August showed the smallest decline in a year.
The unemployment rate still jumped to a 26-year high of 9.7
percent. On Saturday, finance ministers and central bankers from
Group of 20 nations pledged to keep emergency support for their
economies in place for now. []
Investec's Heathcote said a weaker dollar was also supporting
gold on Monday. The precious metal often moves in the opposite
direction to the dollar, as it is seen as an alternative to
holding the U.S. currency.
A weaker dollar also boosts gold for investors holding other
currencies, since the precious metal is dominated by the
greenback.
The dollar and yen lost ground on Monday, while the euro rose
and the Australian dollar hit its strongest level in a year as
shares gained following a G20 pledge to keep economic supports in
place. []
Many market participants thought gold would be hit by
near-term profit-taking after last week's rally, with gold
futures prices climbing by more than 4 percent during the week to
hit a peak of $999.50 on Thursday.
That was the highest level since February, the last time it
topped $1,000.
In the physical market, investors in Hong Kong cashed in
their gold after a rally while demand from main consumer India
slowed to a trickle. []
PRICES
Precious metals prices at 0626 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 991.70 -1.70 -0.17 12.67
Spot Silver 16.25 0.05 +0.31 43.55
Spot Platinum 1256.00 3.50 +0.28 34.76
Spot Palladium 291.00 1.00 +0.34 57.72
TOCOM Gold 2983.00 29.00 +0.98 15.93 45246
TOCOM Platinum 3777.00 17.00 +0.45 42.42 10922
TOCOM Silver 485.60 7.00 +1.46 52.08 270
TOCOM Palladium 883.00 9.00 +1.03 60.55 311
Euro/Dollar 1.4336
Dollar/Yen 93.17
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 Risa Maeda; Editing by Hugh Lawson)
