* Gold hits 6-week low, then steadies
* For the technicals in gold, click []
* Coming Up: U.S. ICSC chain stores y/y; 1145 GMT
(Recast, adds qyotes)
By Lewa Pardomuan
SINGAPORE, July 7 (Reuters) - Strong physical buying helped
pluck gold from a 6-week low on Wednesday after China said
bullion would not become a major investment home for its
foreign exchange reserves.
The State Administration of Foreign Exchange said U.S.
Treasury securities would remain an important market for the
managers of China's official currency reserves, but gold would
not become a major component of the central bank's portfolio.
[]
Gold <XAU=> dropped to $1,188.60 an ounce, its weakest
since May 25, before bouncing to $1,191.45 by 0535 GMT, hardly
changed from New York's notional close.
"I just came back from lunch and saw good buying, including
from Indian jewellers. Clients are hungry for more physical
gold now," said a physical dealer in Singapore.
Bullion has dropped more than 5 percent since striking a
record above $1,264 an ounce in late June, but turmoil in the
financial markets could offer investors a safe haven.
Gold had struck a lifetime high on worries the euro debt
crisis was spreading and the U.S. economy was slowing.
For a graphic of the 24-hr gold technical outlook, click:
http://graphics.thomsonreuters.com/gfx/WT_20100707092609.jpg
"I wouldn't be surprised to see gold recover back above
$1,200 an ounce or may be move even higher in the near term,"
said David Moore, a commodity strategist at Commonwealth Bank
of Australia in Sydney.
"At the end of the day, I think the uncertainties in the
international economic environment remain significant and they
will be supportive for the gold price in the near term."
U.S. gold futures for August delivery <GCQ0> fell $3.7 to
$1,191.4 an ounce.
The world's largest gold-backed exchange-traded fund, SPDR
Gold Trust <GLD.P>, said its holdings slipped to 1,316.481
tonnes by July 6 from 1,318.915 on July 2. The holdings hit a
record at 1,320.436 tonnes on June 29. []
"At this stage, I wouldn't read too much into that," said
Moore, referring to the decline in ETF holdings. "I don't think
it's inconsistent with what we're just talking about... may be
some profit taking and things like that."
The Nikkei edged down on Wednesday as shares of exporters
that rose the day before gave back some gains, even after Wall
Street's Tuesday rebound that ended a five-day string of
losses. [] []
The physical sector was active in Singapore and Hong Kong,
and steady demand from jewellers and other physical buyers
across Asia led to supply tightness. []
"We've been selling gold since last week, but it's
difficult to get hold of materials within a short period," said
another physical dealer in Singapore, who trades gold bars.
"The market may also turn around too quickly. That's why it's
difficult for both customers and sellers," he added.
The euro dipped on Wednesday but was still hovering near a
recent seven-week high, with traders saying it could rise
further in the near term due to doubts about a recovery in the
U.S. economy and positive technical signals. []
Precious metals prices at 0535 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 1191.45 -0.05 -0.00 8.74
Spot Silver 17.73 -0.05 -0.28 5.35
Spot Platinum 1501.00 -11.50 -0.76 2.32
Spot Palladium 428.50 -6.50 -1.49 5.67
TOCOM Gold 3361.00 -60.00 -1.75 3.13
46947
TOCOM Platinum 4247.00 -23.00 -0.54 -3.06
17374
TOCOM Silver 50.60 -0.40 -0.78 -2.13
307
TOCOM Palladium 1210.00 -20.00 -1.63 3.86
454
Euro/Dollar 1.2598
Dollar/Yen 87.45
TOCOM prices in yen per gram. Spot prices in $ per ounce.
(Editing by Clarence Fernandez)
