* Gold drops to 2-wk low as dollar bounces versus euro
* Nearly 9 pct below record high
By Lewa Pardomuan
SINGAPORE, Feb 25 (Reuters) - Gold fell to a near two-week
low on Thursday after the U.S. dollar rebounded against the euro,
while firmer oil prices offered little help as investors turned
cautious on bullion after it failed to sustain recent gains.
Gold dropped below the psychological level of $1,100 an ounce
as uncertainties on the euro's outlook, blamed on Greece's debt
crisis, prompted some investors to shift their money to the
dollar or stocks. Gold struck a 1-month high around $1,130 on
Monday.
Spot gold <XAU=> was at $1,091.00 an ounce by 0610 GMT, down
0.6 percent from New York's notional close on Wednesday. It fell
to a near two-week low of $1,088.30 an ounce earlier on Thursday.
Gold was nearly 9 percent below a record high of around
$1,200 hit in December.
"The perception is we're back in a period of a little bit of
limbo," said Darren Heathcote, head of trading at Investec
Australia in Sydney.
"Now we need to get things started again. Either we are going
to go downhill further or we are going to continue with a
recovery. I think we are just waiting for some impetus to push us
in one direction or the other," he added.
The world's largest gold-backed exchange-traded fund, SPDR
Gold Trust <GLD>, said its holdings stood at 1,106.987 tonnes as
of Feb. 24, unchanged from the previous business day. []
The holdings hit a record high of 1,134.03 tonnes on June 1.
U.S. gold futures for April delivery <GCJO> fell 0.5 percent
to $1,091.70 per ounce. They bounced off an intraday low around
$1,088.00 on Thursday, suggesting that bargain hunters would snap
up gold at lower levels.
The euro <EUR=> fell to $1.3451 on Thursday after gaining
around 0.2 percent the previous day as worries about a possible
Greek downgrade lingered. []
The dollar had weakened on Wednesday as investors trimmed
huge long positions in the greenback after the Federal Reserve
reiterated interest rates will stay low for a long time.
German Chancellor Angela Merkel said in a newspaper interview
published on Wednesday that the euro is in a difficult position
for the first time but will weather the storm, adding that
debt-ridden euro zone members such as Greece had to tackle their
own problems. []
"We have a few contradicting factors. The euro is weak but
other commodities and crude oil are firm, that's why gold hasn't
dropped so much," a dealer in Hong Kong said.
U.S. crude futures edged higher above $80 a barrel on
Thursday, adding to gains made the previous day after Bernanke
reaffirmed his commitment to keeping interest rates low. Shanghai
copper rose 0.1 percent, tracking gains on the LME. [] []
Gold, traditionally seen as a safe haven in times of economic
uncertainty, has been moving in tandem with asset classes
perceived as riskier, including equities and other commodities
such as oil.
Investor sentiment has been dampened by growing worries about
the U.S. economy after data showing a sharp fall in U.S. new home
sales on Wednesday, and jitters about tigher regulations on
futures and options on commodities, said Koichiro Kamei, managing
director at research firm Market Strategy Institute in Tokyo.
"Worries about regulations may be spurring funds to reduce
positions in the short term, outweighing buying interest from
Asian physical buyers at lower prices," he said.
The U.S. Commodity Futures Trading Commission said on Tuesday
it will hold a public meeting on March 25 to examine whether
position limits are needed for gold, silver and copper futures
markets. []
PRICES
Precious metals prices at 0614 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 1092.25 -5.00 -0.46 -0.31
Spot Silver 15.78 -0.18 -1.13 -6.24
Spot Platinum 1504.50 -0.50 -0.03 2.56
Spot Palladium 417.25 -2.75 -0.65 2.90
TOCOM Gold 3158.00 -62.00 -1.93 -3.10 94839
TOCOM Platinum 4334.00 -56.00 -1.28 -1.07 19632
TOCOM Silver 46.10 -0.60 -1.28 -10.83 1126
TOCOM Palladium 1202.00 -36.00 -2.91 3.18 330
Euro/Dollar 1.3464
Dollar/Yen 89.59
TOCOM prices in yen per gram. Spot prices in $ per ounce.
(Additional reporting by Chikako Mogiin Tokyo)
