* Dollar reverses early decline vs euro
* WGC says Russia, China, others may lift gold reserves
(Recasts, updates prices, market activity, adds second
byline/dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Oct 4 (Reuters) - Gold eased on Monday as
the dollar rose on promising U.S. existing home sales data, but
renewed worries about financial stability in some euro zone
countries kept the metal from falling further.
Bullion came under pressure as the dollar rebounded against
the euro on renewed concerns about the financial stability of
peripheral euro zone countries. Wall Street stock indexes also
fell more than 1 percent.
"Gold is holding up comparatively well considering the
rebound in the U.S. dollar. Friday's highs were tested, and the
price has come in for light profit-taking," said David
Thurtell, an analyst at Citigroup.
A report showing pending sales of previously owned U.S.
homes rose to a four-month high in August also boosted the
dollar and took some steam out of bullion. []
The usual inverse relationship between gold and dollar has
showed signs of strengthening of late. The 25-day simple
correlation between the metal and the the U.S. currency has
increased to a negative 1.
Spot gold <XAU=> eased 0.2 percent at $1,313.60 an ounce at
12:24 p.m. EDT (1624 GMT). It hit a record at $1,320.80 an
ounce on Friday. U.S. gold futures for December delivery <GCZ0>
dropped $3.20 to $1,314.60.
Gold rose to a series of record highs last week after a
string of unimpressive U.S. data reports and comments from
Federal Reserve officials reinforced expectations of further
monetary easing.
The dollar reversed last week's weakening trend on Monday,
as bad news from Ireland, Portugal and Greece overshadowed
concerns the Federal Reserve may further ease U.S. monetary
policy, a move that would hurt the U.S. currency and support
gold. []
Analysts said the dollar may find some short-term relief as
investors cover short positions in the currency, but many say
the trend for dollar weakness is intact amid ongoing
speculation the Federal Reserve could ease U.S. monetary policy
further.
Analysts are now eyeing key U.S. non-farm payrolls data due
on Friday for clues as to the next direction of the dollar.
"Continued deterioration in U.S. economic data would
reinforce the already negative sentiment surrounding the
dollar," said CMC Markets analyst Michael Hewson in a note.
"This Friday's U.S. employment and payrolls report for
September should offer clues as to whether or not the U.S.
economy is starting to turn around."
Rick Bensignor, chief market strategist at investment
banking group Execution Noble, said gold could head for a
$50-75 short-term pullback as upward technical momentum was
fading in an overly bullish market.
RENEWED EURO ZONE WORRIES
Concerns about the stability of the euro zone have again
come to the forefront, increasing gold's appeal as a hedge
against economic uncertainty.
The Irish central bank said on Monday that Ireland's
economy will crawl to a virtual halt this year, defying
government hopes of modest growth, underlining the challenge
the country's leaders face to revive its fortunes.
[].
A Reuters poll of analysts last week found most felt gold's
run to record highs is likely to continue for the rest of 2010,
with two out of three seeing prices above $1,350 by year-end.
[]
A senior official at the World Gold Council told Reuters
that central banks in Russia, China and the Philippines are
expected to continue raising their gold holdings to balance
their reserves, a potentially significant demand driver.
[]
Silver <XAG=> was trading up 0.2 percent at $22 an ounce.
In a smaller and less liquid market, silver has outpaced
the rise in gold prices so far this year, with the gold-silver
ratio - the number of silver ounces needed to buy an ounce of
gold - dipping below 60 for the first time in nearly a year
last week. (Graphic: http://link.reuters.com/wuk76p)
Platinum <XPT=> slipped 0.5 percent at $1,667.50 an ounce,
and palladium <XPD=> was trading down 1.5 percent at $560.78.
Prices at 12:39 p.m. EDT (1639 GMT)
LAST NET PCT YTD
CHG CHG CHG
US gold <GCZ0> 1315.00 -2.80 -0.2% 20.0%
US silver <SIZ0> 22.025 -0.035 -0.2% 30.8%
US platinum <PLV0> 1671.60 -4.30 -0.3% 13.6%
US palladium <PAZ0> 564.25 -10.65 -1.9% 38.0%
Gold <XAU=> 1313.80 -1.80 -0.1% 19.8%
Silver <XAG=> 22.00 0.03 0.1% 30.6%
Platinum <XPT=> 1668.00 -7.15 -0.4% 13.8%
Palladium <XPD=> 560.78 -8.72 -1.5% 38.3%
Gold Fix <XAUFIX=> 1313.50 -2.50 -0.2% 19.0%
Silver Fix <XAGFIX=> 22.03 8.00 0.4% 29.7%
Platinum Fix <XPTFIX=> 1667.00 1.00 0.1% 13.7%
Palladium Fix <XPDFIX=> 565.00 1.00 0.2% 40.5%
(Reporting by Frank Tang; Editing by David Gregorio)
