* Slump in physical demand could weigh on prices
* SPDR Gold holdings <XAUEXT-NYS-TT> steady
By Miho Yoshikawa
TOKYO, Aug 21 (Reuters) - Gold held near $940 on Friday after
falling the previous session, although prices looked vulnerable
to declines amid sluggish physical demand.
The precious metal has mostly traded below $950 this week, at
one point falling more than 3 percent from last week's high of
$960.55.
Gold <XAU=> was at $938.50 per ounce at 0535 GMT, down 0.1
percent from the notional New York close of $939.35. It is on
track for a 0.8 percent fall this week.
U.S. gold futures for December delivery <GCZ9> edged down 0.1
percent to $940.40 per ounce.
The absence of demand for gold jewellery, as demonstrated by
falling imports in India, is weighing on gold, traders said.
India's July gold imports fell two-thirds from a year earlier
as high prices dented demand in one of the world's top markets
where gold jewellery is often given as gifts during festival
seasons or at weddings, a trade body said this week.
[]
"Gold is a luxury item but in this day and age money is going
where it is needed ... and a prime example of that happening is
in India," said Kazuhiko Saito, chief analyst at Tokyo's Fujitomi
Co Ltd.
Another mark of gold's declining attraction among investors
is the slump in holdings of gold-backed exchange-traded funds.
The SPDR Gold Trust <GLD>, the world's largest, said its
holdings held steady at 1,065.49 tonnes as of Aug. 20, unchanged
for almost two weeks and down 68.54 tonnes from a record marked
on June 1. []
Saito said gold could also come under selling pressure in the
days ahead if news of the suspension of the U.S. "Cash for
Clunkers" auto rebates pressures oil prices.
Gold typically moves in line with crude, as it is often
bought as a hedge against oil-led inflation.
The U.S. government said it would end the popular programme
on Monday as the plan's $3 billion budget runs dry, a month after
it was launched. []
"As it looks now, there are no strong fundamentals to support
gold prices," Saito said.
The yen rose broadly on Friday as investors remained worried
about the potential for further weakness in Chinese shares and
shied away from risky investments. []
The euro fell 0.8 percent to 133.15 yen <EURJPY=R>.
Against the dollar, the single European currency edged down
to $1.4220 <EUR=>.
Platinum <XPT=> was down 1.1 percent at $1,222.50 per ounce
although the metal used in jewellery and autocatalysts could come
under upward pressure depending on developments in South Africa,
the world's top producer of the precious metal.
Impala Platinum <IMPJ.J>, the world's second-biggest platinum
producer, said on Thursday that it would seek further talks with
a South African union planning an indefinite strike next week.
[]
PRICES
Precious metals prices at 0539 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 938.70 -0.65 -0.07 6.65
Spot Silver 13.73 -0.16 -1.15 21.29
Spot Platinum 1226.50 -10.00 -0.81 31.60
Spot Palladium 268.50 -3.50 -1.29 45.53
TOCOM Gold 2838.00 -40.00 -1.39 10.30 35156
TOCOM Platinum 3704.00 -89.00 -2.35 39.67 12786
TOCOM Silver 417.50 -11.40 -2.66 30.75 115
TOCOM Palladium 820.00 -15.00 -1.80 49.09 193
Euro/Dollar 1.4224
Dollar/Yen 93.69
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 Chris Gallagher)
