* Gold down 1 percent, investors reap profits
* For the technical outlook on gold, click on
[]
* Coming Up: U.S. April consumer price index; 1230 GMT
(Updates prices)
By Lewa Pardomuan
SINGAPORE, May 19 (Reuters) - Gold dropped around 1 percent
on Wednesday despite a tumbling euro after attempts to revisit
last week's highs failed, stirring concerns the precious metal
may be ripe for a correction.
Gold struck a record of $1,248.95 an ounce on Friday on
fears that euro zone austerity measures could impede, rather
than aid, a recovery. But rises in net long positions in New
York futures to near their peak also suggested the market was
technically overbought. []
Fears of contagion from Greece's debt crisis have driven
gold to a record as investors ditched the euro and bought the
metal as safe haven from volatile currencies and stocks. Gold
has gained around 11 percent this year.
Gold <XAU=> hit an intraday high of $1,227.10 an ounce
before hitting a low around $1,205. It was later quoted at
$1,209.20 by 0524 GMT, down $10.50 from New York's notional
close on Tuesday.
Dealers noted selling before COMEX June contract's first
notice day next week, but sales of gold scrap had subsided in
Asia as holders waited for bullion prices to recover.
"Those who are long may need to close off their position if
they want to avoid physical delivery," said a dealer in
Singapore.
"Some investors may also want to switch to holding the
dollar that gives higher interest, rather than holding on to
gold. Considering both the dollar and gold are safe haven
instruments, holding on to the dollar seems to offer better
returns currently."
U.S. gold futures for June delivery <GCM0> fell $4.4 to
$1,210.2 an ounce after hitting a high of $1,228.2 an ounce. It
had hit a one-week low on Tuesday before recovering. []
COMEX open interest rose almost 15,000 lots to an all-time
high above 600,000 lots as of May 17, indicating rising
volatility. <NYMMTLFUT/VOI>
For a graphic showing the gold technical outlook, see:
http://graphics.thomsonreuters.com/gfx/WT_20101905092102.jpg
"There's a lot of positive news already priced in gold. It's a
heavily overbought market," said Mark Pervan, senior
commodities analyst at ANZ.
"The key catalyst would be, I think, still a heightened
level of risk aversion. What you are seeing at the moment is
just profit-taking of near record high levels of futures
markets."
But as worries about Europe's debt crisis lingered, there
was room for bullion to test record levels again. Holdings in
the world's largest gold-backed exchange traded fund, SPDR Gold
Trust <GLD.P>, stood unchanged at a record 1,217.108 tonnes.
[]
The euro fell to its lowest in more than four years against
the dollar on Wednesday as a sell-off in the single currency
gathered pace after Germany's move to ban naked short-selling
of some securities rattled investors. []
"It could retest highs, I think because the fact that the
situation in Europe is not a short-term fix. It's going to be
protracted for the months ahead," said Pervan of the ANZ.
Silver <XAG=>, platinum <XPT=> and palladium <XPD=> tracked
gold lower.
London's Platinum Week entered its second day on Tuesday,
with analysts, traders, refiners and recyclers meeting in the
British capital to discuss industry developments.
[]
Precious metals prices at 0524 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 1209.20 -10.50 -0.86 10.36
Spot Silver 18.58 -0.32 -1.69 10.40
Spot Platinum 1647.50 -19.00 -1.14 12.30
Spot Palladium 484.25 -10.75 -2.17 19.42
TOCOM Gold 3588.00 -61.00 -1.67 10.10
64289
TOCOM Platinum 4915.00 -127.00 -2.52 12.19
24501
TOCOM Silver 55.50 -1.30 -2.29 7.35
876
TOCOM Palladium 1424.00 -81.00 -5.38 22.23
1084
Euro/Dollar 1.2217
Dollar/Yen 92.04
TOCOM prices in yen per gram. Spot prices in $ per ounce.
(Editing by Clarence Fernandez)
