(Recasts, add quotes, updates closing prices; adds NEW YORK
to dateline)
By Frank Tang and Anna Ringstrom
NEW YORK/LONDON, March 20 (Reuters) - Gold finished
nearly 3 percent lower on Thursday, capping a tumultuous week
that included a record high on Monday and a 6 percent slide
the previous session, as investment funds cashed in bullion
for cash to cover losses in other financial markets.
All U.S. commodities markets will be shut on Friday for
the Good Friday holiday. The markets will reopen on Monday
for normal trading hours. []
The combination of a sharp bounce of the dollar and heavy
losses in the energy markets also prompted liquidation in
gold amid a full-scale commodities retreat for a second day.
Other metals also dropped sharply following gold's
decline, led by silver's losses of more than 8 percent.
Platinum and palladium also slumped.
On Thursday, spot gold <XAU=> bottomed at $904.65 -- a
level last seen on Feb. 18 -- versus $944.20/945.00 late in
New York on Wednesday. It was last at $920.30/921.10 by New
York's last quote at 2:15 p.m. EDT (1815 GMT).
Gold dived 6 percent on Wednesday in a dash for cash
which analysts said was sparked by a smaller-than-expected
U.S. rate cut on Tuesday.
Gold peaked on Monday at $1,030.80. The yellow metal was
still up 10 percent since the start of the year.
Jonathan Jossen, an independent floor trader in New York,
blamed gold's decline on deleveraging -- raising cash to
reduce debt, meet margin calls and cover losses.
"That's what is happening all around the market. All they
knew was to be long in commodities, but now they pulled the
rug out from under it. So, I'd definitely say it's margin
calls. It's definitely part of it," Jossen said.
The active U.S. gold contract for April delivery on the
COMEX division of the New York Mercantile Exchange settled
down $25.30, or 2.7 percent, to $920.00 an ounce, following
the biggest one-day percentage loss in nearly two years on
Wednesday.
Stocks in gold producers also extended their sharp
sell-off into a fourth day on Thursday.
The most volatile of the sector indexes, the American
Stock Exchange's Gold BUGS index <.HUI> of producers, shed
another 4 percent on Thursday, bringing its losses since its
Monday peak to nearly 17 percent. []
"There has been a lot of long liquidation, I think
primarily driven by the flee to cash to cover other losses
... especially in equities and currencies," said Daniel
Hynes, metals analyst at Merrill Lynch.
"I think gold will remain under pressure today and it
could drag on into next week. But I don't think we are too
far off some good support levels which may see it rebound,"
Hynes said.
The dollar rallied on Thursday to its strongest level
against the euro in a week, as investors took profits from
oil, gold and other commodities, repatriating their cash back
into the beleaguered U.S. currency.
Oil was down as much as 4 percent <CLc1>, briefly dipping
below $100 a barrel, denting gold's appeal as a hedge against
inflation. However, U.S. crude futures retraced early losses
and traded just below $102 a barrel in afternoon trade.
Dealers also noted a significant drop in the open
interest of the U.S. gold futures after they surged to a
record high on Monday, signaling heavy liquidation of long
positions.
UBS said in a research note it too expected gold to
remain volatile in the short term, being caught up in the
broader deleveraging trend.
"We are now at very attractive levels in many precious
and base metals, but it is impossible to stand in the way of
the relentless selling," the bank said.
Other precious metals followed gold. Silver <XAG=>
dropped 8.3 percent to $16.86/16.91 an ounce from its
previous finish of $18.38/18.43 late in New York on
Wednesday.
Platinum <XPT=> fell 2 percent to $1,855/1,875 an ounce
from its Wednesday close of $1,900/1,910 -- off a record high
of $2,290 hit on March 4 -- while palladium <XPD=> fell 6
percent to $438/443 an ounce from its U.S. late Wednesday
finish of $455/460.
(Additional reporting by Bate Felix in London)
