* Gold drops as dollar rises amid lower risk appetite
* China says it will be prudent in adding to gold holdings
* Palladium retreats further from 2-year high
* Coming up: Reuters Global Mining Summit continues Wed
(Recasts, updates comments, closing prices, adds NEW YORK
to dateline, second byline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, March 9 (Reuters) - Gold fell on Tuesday
as a resurgent dollar amid lower risk appetite and sovereign
debt worries dented investment interest in the metal.
The euro dropped against the dollar, still struggling in
the face of debt concerns in peripheral euro zone countries
such as Greece and Portugal. []
"With the euro below $1.37, gold will be struggling,
because it is not going to get the support from the
currencies," said Saxo Bank senior manager Ole Hansen.
"The upside on the euro seems to be capped by now, and if
that is the case, gold will be as well."
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For stories from the Reuters Global Mining and Steel
Summit, click on: []
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Spot gold <XAU=> was at $1,119.95 an ounce at 3:14 p.m. EST
(2014 GMT), against $1,122.85 late in New York on Monday.
U.S. gold futures for April delivery <GCJ0> on the COMEX
division of the NYMEX settled down $1.70 at $1,122.30 an
ounce.
The metal recovered from session lows of $1,108.20 an
ounce. However, as the U.S. currency pared gains, oil prices
recovered some of their earlier losses and metal found strong
buying interest at lower levels, dealers said.
Fitch Ratings said on Tuesday it still has a negative
outlook on Portugal's double-A ratings and was studying the
details of the country's new austerity measures.
[]
Oil prices also slipped back from eight-week highs on
Tuesday, falling nearly 2 percent at their session lows, on
expectations of a rise in U.S. crude inventories and on the
stronger dollar. They later pared losses. []
Gold tends to track crude prices, as the metal can be
bought as a hedge against oil-led inflation.
CHINA OPTS FOR PRUDENCE
China's top foreign exchange manager, head of the State
Administration of Foreign Exchange Yi Gang, said on Tuesday
Beijing will be prudent in adding gold to its official
reserves, wary that such a move would drive prices higher.
[]
Speculation has been rife in the last year that China would
add to its gold reserves, given that its current holdings make
up only a small proportion of its foreign exchange reserves.
UBS analyst Edel Tully said in a note that given the
price-negative undertones of Yi's comments, the gold market's
reaction to the news had been muted.
"While we would expect more near-term downside for gold
once the news sinks in, it is unlikely to entirely quash market
expectations that China will indeed move to increase its
reserve capacity for gold," she said.
Palladium <XPD=> fell most among the precious metals on
Tuesday, slipping as much as 3 percent as traders cashed in
gains after its rise to two-year highs at $480 an ounce late
last week.
The world's biggest palladium producer, Norilsk Nickel
<GKMN.MM>, told the Reuters Global Mining and Steel Summit that
the metal is an appealing investment because future jewelry and
industrial demand will be strong. []
Palladium, primarily used in autocatalysts, has benefited
from well-received February car sales numbers from China and
the United States -- both primarily petrol-engine markets,
which use a higher loading of palladium than platinum.
Palladium was last at $464.50 against $470, while platinum
<XPT=> was at $1,586 an ounce versus $1,595.50. Among other
precious metals, silver <XAG=> was at $17.24 an ounce against
$17.21.
Close Change Pct 2009 YTD
Chg Close % Chg
US gold <GCJ0> 1122.30 -1.7 -0.2 1096.20 2.4
US silver <SIK0> 17.338 0.066 0.4 16.845 2.9
US platinum <PLJ0> 1596.90 -3.20 -0.2 1471.00 8.6
US palladium <PAM0> 469.30 -2.05 -0.4 408.85 14.8
Prices at 3:40 p.m. EST (2040 GMT)
Gold <XAU=> 1119.40 -3.45 -0.3 1096.35 2.1
Silver <XAG=> 17.24 0.03 0.2 16.84 2.4
Platinum <XPT=> 1586.00 -9.50 -0.6 1465.50 8.2
Palladium <XPD=> 464.50 -5.500 -1.2 405.50 14.5
Gold Fix <XAUFIX=> 1115.75 -4.25 -0.4 1104 1.1
Silver Fix <XAGFIX=> 17.05 -28.00 -1.6 16.99 0.4
Platinum Fix <XPTFIX=> 1574.00 10.00 0.6 1466 7.4
Palladium Fix<XPDFIX=> 459.00 3.00 0.6 402 14.2
(Reporting by Frank Tang and Jan Harvey; Editing by Lisa
Shumaker)
