* Inverse link between gold, dollar weighs; euro tumbles
* Interest rates seen rising U.S.treasuries yeilds up
* Coming up: CFTC metals futures hearing on Thursday
(Recasts, adds comments, updates closing prices, changes
byline, dateline, previously LONDON)
By Frank Tang
NEW YORK, March 24 (Reuters) - Gold fell to a six-week low
on Wednesday, losing 1.5 percent, as risk-averse sentiment
prompted investors to buy safe investments such as U.S.
Tresuries and to sell gold and equities.
Palladium tumbled more than 4 percent on heavy
profit-taking in thin trade conditions after recent gains based
on optimism of the auto market.
Early last week, gold had risen in the face of a rising
greenback, boosted by safe-haven buying due to sovereign debt
worries about Greece and Europe and uncertainty about
currencies.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic showing correlation between gold and euro-dollar:
http://link.reuters.com/gym94j
Reuters Insider TV program on limits, click:
http://link.reuters.com/cug84j
TAKE A LOOK-CFTC's push for new position limits
[]
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Gold on Wednesday succumbed to a sharply higher dollar,
even though the traditional relationship between the metal and
the U.S. currency could still be broken in the near term, said
Bill O'Neill, partner at commodities consultant LOGIC
Advisors.
"One negative for gold today is the big surge in interest
rates after a very strong run-up in the 10- and two-year notes.
Higher interest rates are negative, making gold less attractive
as an alternative asset," O'Neill said.
Investors appetite was evidently lower as U.S. Treasuries
prices tumbled, sending benchmark 10-year yields to a one-month
high. Wall Street also traded lower. [] []
Spot gold <XAU=> fell as low as $1,084.85 an ounce, its
weakest since Feb. 12, and was at $1,085.90 an ounce at 3:09
p.m. EDT (1909 GMT), against $1,101.65 late in New York on
Tuesday.
U.S. April gold futures <GCJ0> settled down $14.90 or 1.4
percent at $1,088.80 an ounce on the COMEX division of the
NYMEX.
The dollar rose across the board, pushing the euro to a
10-month low after a rating downgrade for Portugal added to
worries about debt levels and growth in euro zone's smaller
countries.
The euro's move comes ahead of a European Union summit
later this week, and after Germany signaled it may accept
European financial aid for Greece as a last resort. Uncertainty
over Greece is likely to continue to weigh on the euro
[]
Analysts, however, warned of an oversold euro by hedge
funds, and a rebound of the common currency could trigger heavy
short covering, increasing volatilities in the gold market.
In the United States, economic reports on new orders for
manufactured goods and housing data were mixed, although
analysts said the lackluster figures would not prevent
investors from buying more dollars. []
[]
CFTC METALS HEARING IN FOCUS
Precious metals investors will watch a day-long hearing by
the top U.S. futures regulator on Thursday to determine whether
gold, silver and copper markets need speculative position
limits to prevent price manipulation. []
The Commodity Futures Trading Commission, which has
struggled to gain support for a plan to curb concentration in
energy markets, is expected to face even tougher resistance as
it considers whether similar provisions are needed for metals.
Silver <XAG=> was at $16.58 an ounce against $16.97,
tracking losses in gold, while platinum <XPT=> was at $1,579 an
ounce against $1,607.
Palladium <XPD=> was the biggest faller among the precious
metals, sliding 4.3 percent. It was last at $444 against
$464.50.
Year to date, palladium was still up nearly 9 percent,
easily outperforming the rest of the precious metals complex.
Close Change Pct 2009 YTD
Chg Close % Chg
US gold <GCJ0> 1088.80 -14.9 -1.4 1096.20 -0.7
US silver <SIK0> 16.641 -0.386 -2.3 16.845 -1.2
US platinum <PLJ0> 1587.90 -20.60 -1.3 1471.00 7.9
US palladium <PAM0> 453.90 -10.65 -2.3 408.85 11.0
Prices at 3:11 p.m. EDT (1911 GMT)
Gold <XAU=> 1085.45 -16.20 -1.5 1096.35 -1.0
Silver <XAG=> 16.55 -0.42 -2.5 16.84 -1.7
Platinum <XPT=> 1576.50 -30.50 -1.9 1465.50 7.6
Palladium <XPD=> 441.00 -23.500 -5.1 405.50 8.8
Gold Fix <XAUFIX=> 1090.75 -3.25 -0.3 1104 -1.2
Silver Fix <XAGFIX=> 16.68 -10.00 -0.6 16.99 -1.8
Platinum Fix <XPTFIX=> 1586.00 4.00 0.3 1466 8.2
Palladium Fix<XPDFIX=> 456.00 2.00 0.4 402 13.4
(Additional reporting by Jan Harvey in London; Editing by Lisa
Shumaker)
