(Recasts, adds analyst comments, closing prices, adds NEW YORK to
dateline)
By Frank Tang and Atul Prakash
NEW YORK/LONDON, April 25 (Reuters) - Gold ended a tad higher
on Friday, rebounding from three-week lows as a sharp drop in a
gold-backed exchange-traded fund put a damper on bullion's initial
rally on the back of surging crude oil.
Gold <XAU=> was expected to face downward pressure again after
falling nearly 15 percent from last month's record high. Near-term
sentiment had also turned bearish since gold broke its 100-day
moving average of just above $900 an ounce this week, dealers
said.
Spot metal <XAU=> fell as low as $877.60 an ounce and was last
at 886.90/888.30 at 2:15 p.m. EDT (1815 GMT), against
$885.25/886.45 in New York late on Thursday.
Gold futures for June delivery <GCM8> on the COMEX division of
the New York Mercantile Exchange ended up 30 cents at $889.70 an
ounce.
Analysts said bearish market sentiment was also evident from
large withdrawals from exchange-traded funds. Gold held in New
York-listed StreetTRACKS Gold Shares <GLD.P> <XAUEXT-NYS-TT>, the
world's largest gold-backed ETF, fell about 50 tonnes to 591
tonnes -- a level last seen in November last year -- in the last
two sessions.
"(ETF holdings decline) indicating continuing waning fund
interest in the metal at a time when its performance failed to
match positive background conditions," Jon Nadler, senior analyst
of Kitco Bullion Dealers in Montreal, told clients in a note.
The dollar fell further against the euro and headed for its
best monthly performance in 2-1/2 years against a basket of major
currencies and rose further from this week's record lows versus
the euro, boosted by improved sentiment on the U.S. economy.
A firmer dollar makes gold costlier for holders of other
currencies and often lowers bullion demand. The metal is also
generally seen as a hedge against oil-led inflation.
U.S. crude futures <CLc1> ended $2.46 higher at $118.52 a
barrel.
"Firm oil is leading gold higher again and the euro is also
enjoying a small rebound," said Tom Kendall, metals strategist at
Mitsubishi Corp.
"June U.S. gold futures managed to bounce just ahead of key
support at $877 and that may have given some comfort to bulls, but
the near-term outlook is much less certain positive than it was a
couple of weeks ago."
David Holmes, director of sales at Dresdner Kleinwort, said
near-term sentiment in the bullion market was not very positive as
concerns about the credit crisis had receded and some of the
funds, which follow short-term trends, may sell gold.
GOLD VULNERABLE
Dresdner Kleinwort said in a report that when a market stopped
rising despite positive fundamentals, investors should get out of
their trading positions.
"Gold is likely to have already reached the year's high and to
come under pressure particularly in H2. We thus recommend not only
closing long positions in gold, but also selling gold short," it
said.
In industry news, the Swiss National Bank does not plan gold
sales beyond the programme to sell 250 tonnes announced last year,
Chairman Jean-Pierre Roth said.
In other precious metals, platinum partly recovered after
falling to a three-week low of $1,907 an ounce. It <XPT=> was last
quoted at $1,944.50/1,964.50, still down from $1,961.50/1,971.50
late on Thursday. It hit a record high of $2,290 on March 4.
But precious metals consultancy GFMS Ltd said on Thursday that
platinum may spike to a record high of $2,400 an ounce this year
as the investment climate continued to be positive and
fundamentals remained strong. []
Silver <XAG=> was at $16.85/16.91, down from $16.68/16.78 an
ounce, while spot palladium <XPD=> fell to $436/444 an ounce from
$435/441 in the U.S. market late on Thursday.
(Editing by Matthew Lewis)
