(recasts, adds quotes, changes prices, pvs SINGAPORE)
By Atul Prakash
LONDON, April 25 (Reuters) - Gold steadied after hitting
three-week lows on Friday as the dollar cut early gains against
the euro and oil prices rose after slipping, analysts said.
But gold <XAU=> was expected to face downward pressure again
after falling nearly 15 percent from record highs set on March
17. Selling gathered pace after gold broke its 100-day moving
average of just above $900 an ounce this week, they said.
Spot metal <XAU=> fell as low as $877.60 an ounce before
rising to $884.70/885.70 at 1022 GMT, against $885.25/886.45 in
New York late on Thursday. A level below $872.90 would be the
lowest price in three months.
"The dollar definitely contributed today. But $875 is a
critical number and if we break the level, that opens it up to
the $850 level," said David Holmes, director of metals sales at
Dresdner Kleinwort investment bank.
He said near-term sentiment in the bullion market was not
very positive as concerns about the credit crisis had receded
and some of the funds, which follow short-term trends, were
likely to sell the metal.
The dollar pared gains after hitting a one-month high on
improved sentiment on the U.S. economy. The number of workers
filing initial claims for unemployment benefits unexpectedly
fell last week, in a possible sign that the economy may not be
in as much trouble as previously thought.
Investors will look for further clues on the health of the
U.S. economy and the extent of rate cuts from the Fed from a
Reuters/University of Michigan consumer sentiment survey to be
released at 1355 GMT.
A firmer dollar makes gold costlier for holders of other
currencies and often lowers bullion demand. The metal is also
generally seen as a hedge against oil-led inflation.
Oil prices steadied after falling earlier in the day.
PHYSICAL DEMAND
"Further strengthening in the dollar has undermined the gold
price," Fairfax investment bank said in a report.
"At these prices jewellery buying is likely to be picking
up, but we may see lacklustre price movements for the next few
months, possibly till September, unless a sharp weakening in the
dollar prompts investment interest in the metal."
Gold futures for June delivery <GCM8> on the COMEX division
of the New York Mercantile Exchange fell $4.00 to $885.40 an
ounce in electronic trading.
Dresdner Kleinwort said in a report that when a market
stopped rising despite positive fundamentals, investors should
get out of their trading positions.
"Gold is likely to have already reached the year's high and
to come under pressure particularly in H2. We thus recommend not
only closing long positions in gold, but also selling gold
short," it said.
In industry news, the Swiss National Bank does not plan gold
sales beyond the programme to sell 250 tonnes announced last
year, Chairman Jean-Pierre Roth said.
In June 2007, the bank said it would sell 250 tonnes of gold
by September 2009, in line with an agreement among European
central banks to limit gold sales to 500 tonnes a year. Last
year, it sold 145 tonnes of gold under the announced programme.
In other precious metals, platinum partly recovered after
falling to a three-week low of $1,907 an ounce. It <XPT=> was
last quoted at $1,932/1,942, still down from $1,961.50/1,971.50
late on Thursday. It hit a record high of $2,290 on March 4.
But precious metals consultancy GFMS Ltd said on Thursday
that platinum may spike to a record high of $2,400 an ounce this
year as the investment climate continued to be positive and
fundamentals remained strong. []
Silver <XAG=> was at $16.59/16.65, down from $16.68/16.78 an
ounce, while spot palladium <XPD=> fell to $433/441 an ounce
from $435/441 in the U.S. market late on Thursday.
(Reporting by Atul Prakash; editing by Peter Blackburn)
