* Follow-through weakness from Goldman woes hit gold early
* Gold limits losses; Paulson liquidation worries ease
* Coming up: U.S. March Producer Prices due Thursday
(Recasts, adds comments, closing prices, changes byline,
dateline, previously LONDON)
By Frank Tang
NEW YORK, April 19 (Reuters) - Gold finished nearly flat on
Monday after dropping again on caution about potential fallout
from fraud charges that U.S. authorities have leveled at
leading commodities player and investment bank Goldman Sachs
Group Inc <GS.N>.
Many financial markets sold off on Friday after the U.S.
Securities and Exchange Commission charged Goldman Sachs with
fraud by over its marketing of a subprime mortgage product.
Investors took the opportunity to cash in profits on gold,
which has rallied about $100 since early February. Gold tumbled
2 percent on Friday and fell to a two-week low in early trading
on Monday, but recovered to finish with only slight losses.
"Everybody's on the side caution, looking to see if there
is another shoe to drop," said Bruce Dunn, vice president of
trading at New Jersey-based Auramet Trading.
Many in the gold market voiced concern over the SEC's
allegation that Paulson & Co, a $32 billion hedge fund run by
billionaire John Paulson, worked with Goldman in creating a
collateralized debt obligation. Paulson was not charged.
The fact that gold prices finished on Monday without
further sharp losses quelled speculation that Friday's selloff
was related to any liquidation by Paulson, traders said.
Spot gold <XAU=> was at $1,135.55 an ounce at 2:42 p.m. EDT
(1842 GMT), down a touch from $1,136.45 late in New York on
Friday. Earlier, it hit a two-week low of $1,123.15.
U.S. June gold futures <GCM0> settled down $1.10, or 0.1
percent, at $1,135.80 an ounce on the COMEX division of the
NYMEX.
Dunn also cited lingering concerns about debt-laden Greece
and expectations that China could raise rates.
Gold hit a two-week low early, but recovered as the dollar
cut gains against the euro and as investors covered short
positions after Friday's 2 percent sell-off.
Analysts said bullion investors were also nervous about
potential currency volatility, after China's President Hu
Jintao said the country remained on course to gradually put in
place a managed floating exchange rate system. []
"In the near term, we expect the developments surrounding
Goldman to overshadow all other issues that previously
dominated gold trading, including the pace and tempo of the
economic recovery and its impact on monetary policy (and) the
possibility of a Chinese yuan revaluation," said HSBC in a
note.
FUTURES MARKET OVERBOUGHT?
However, a rapid rise in speculative net long positions in
the U.S. futures market, according to the latest trade data by
the Commodity Futures Trading Commission, is worrying some
analysts due to further profit taking in the short
term.[]
"As we enter a new week, particularly following a negative
weekly close, the focus of investor positioning in the gold
market comes further under the spotlight," UBS analyst Edel
Tully said in a report on Monday.
"There is little doubt that such positioning is bordering
on crowded," she said. "So long as risk aversion remains in
place, the danger is that gold longs will run for the exit as
fast as they entered over the previous two weeks."
Other precious metals also rose in line with gold's
recovery, with silver <XAG=> at $17.72 an ounce against
$17.67.
Platinum <XPT=> was at $1,694.50 an ounce against $1,690,
while palladium <XPD=> was at $532 against $528.50.
The market will be watching a platinum/palladium report due
Thursday by respected metals consultant GFMS Ltd.
The market will watch U.S. producer prices data, due for
release on Thursday at 8:30 a.m. EDT (1230 GMT). Analysts
expect a 5.8 percent year-to-year increase in producer prices
in March, or a 0.9 percent increase when food and energy costs
are excluded.
Close Change Pct 2009 YTD
Chg Close % Chg
US gold <GCM0> 1135.80 -1.1 -0.1 1096.20 3.6
US silver <SIK0> 17.731 0.056 0.3 16.845 5.3
US platinum <PLN0> 1696.60 1.30 0.1 1471.00 15.3
US palladium <PAM0> 533.70 1.85 0.3 408.85 30.5
Prices at 3:33 p.m. EDT (1933 GMT)
Gold <XAU=> 1134.65 -1.80 -0.2 1096.35 3.5
Silver <XAG=> 17.69 0.02 0.1 16.84 5.0
Platinum <XPT=> 1694.50 4.50 0.3 1465.50 15.6
Palladium <XPD=> 533.00 4.500 0.9 405.50 31.4
Gold Fix <XAUFIX=> 1136.25 8.75 0.8 1104 2.9
Silver Fix <XAGFIX=> 17.50 -85.00 -4.6 16.99 3.0
Platinum Fix <XPTFIX=> 1683.00 4.00 0.2 1466 14.8
Palladium Fix<XPDFIX=> 523.00 1.00 0.2 402 30.1
(Additional reporting by Svea Herbst-Bayliss in Boston and Jan
Harvey in London; Editing by David Gregorio)
