(Updates with analyst comments, New York closing prices, market
activity)
By Atul Prakash and Anna Ringstrom
LONDON, April 8 (Reuters) - Gold ended lower on Tuesday as
investors took profits from recent highs, awaiting central
banks' rate announcements later in the week that could give the
market direction.
Gold <XAU=> hit an intra-day low of $907.90 an ounce and
was at $913.10/913.90 by New York's last quote at 2:15 p.m. EDT
(1815 GMT). On Monday it jumped to a one-week high of $929.10.
The bullion hit an all-time of $1,030.80 on March 17.
"Yesterday was decent (but) when it didn't push through a
few technical levels around the $930 mark, people decided to
take some money off the table instead," said David Thurtell,
analyst at BNP Paribas.
Analysts said a slowdown in physical demand could contribute
to the slide in prices, as could news the International Monetary
Fund announced plans to sell some of its gold.
The IMF agreed on Monday to put its finances on sounder
footing by selling some of its gold and investing the profits
in government and corporate bonds, and possibly equities.
"The sale will be within the confines of the European Gold
Agreement so it shouldn't be depressing the market. But this
might mean the banks do meet the 500-tonnes quota, so it is
slightly bearish," Thurtell said.
The European central bank gold agreement (CBGA) allows for
the sale of 500 tonnes a year. The quota is not always filled.
"It's not something that's going to rock the market. I
think the market can absorb it. And in the long term, for the
market, it's a healthy development that gold is moving more
towards private hands," said Axel Merk, portfolio manager of the
$400 million Merk Hard Currency Fund in Palo Alto, California.
The U.S. dollar as well as oil prices -- often drivers for
gold -- were little changed on Tuesday. Gold is generally seen
as a hedge against oil-led inflation and often moves in the
opposite direction of the dollar as it becomes cheaper for
investors holding other currencies.
"The potential (for gold) to break higher is still there but
it will depend on the euro-dollar," said Frederic Panizzutti,
metals analyst at MKS Finance.
Key rate announcements and statements from central banks
this week could give the forex markets and thus gold some fresh
legs, analysts said. The Bank of Japan is seen on hold on
Wednesday, as is the European Central Bank on Thursday. Bank of
England is seen cutting its key interest rate on Thursday.
Economists reckon the ECB will not cut rates from 4 percent
until the third quarter and expect the bank to stick to a
relatively hawkish message on Thursday.
The Federal Reserve, however, is seen cutting by at least
25 basis points at the end of this month from 2.25 percent.
Lower U.S. interest rates tends to weaken the dollar as
investors switch to other alternative assets, including gold,
for better returns.
IMF GOLD SALES
IMF's planned gold sales are pending approval by the U.S.
Congress and the IMF's 185 member countries. Under the proposal,
an endowment will be created with the sale of 403.3 tonnes of
the fund's 3,217 tonnes of gold stocks.
"Should sales be given the go-ahead, we would expect them to
be done in a controlled manner that the market can absorb,
although this is a significant amount," Fairfax investment bank
said in a market report.
An IMF official said the gold would be sold on the market
or offered to central banks at market prices.
"Given that the sales would happen over some years and
within the CBGA, this amount, if approved, would be readily
absorbed by the investment and jewellery quarter," said Ross
Norman, managing director of TheBullionDesk.com.
Other precious metals tracked gold.
Spot silver <XAG=> fell to $17.65/17.70 an ounce from
$18.06/18.11 late in New York on Monday.
Spot platinum <XPT=> dipped to $2,008/2,018 an ounce from
$2,030/2,040 -- well below a lifetime high of $2,290 hit on
March 4 due to mining disruptions in top producer South
Africa.
Spot palladium <XPD=> edged down $1 to $449/457 an ounce.
(Additional reporting by Frank Tang in New York; editing by
Matthew Lewis)
