* Gold slides to 6-1/2-week low as dollar gains
* Weak physical buying pressures bullion prices
* SPDR holdings rise
(Recasts, updates prices, market activity; new byline, changes
dateline, previously LONDON)
By Carole Vaporean
NEW YORK, Dec 21 (Reuters) - Gold slid to a 6-1/2-week low
in thin pre-holiday dealings on Monday as the dollar rose on
signs of an improving U.S. economy.
Spot gold <XAU=> traded as low as $1,090.65 an ounce, well
below $1,112.25 an ounce late in New York on Friday. It pulled
back up to $1,091.30 an ounce at 3:32 p.m. EST (2032 GMT).
On the COMEX division of the New York Mercantile Exchange,
gold futures for February delivery <GCG0> slipped as far as
$1,090.80, but bounced off the session low to settle at
$1,096.00, down $15.50 an ounce.
Both lows were last seen on Nov. 6.
In early business, gold tossed around at unchanged levels
as some players squaring books as year-end approaches sold
holdings while others bought in anticipation of renewed price
appreciation in 2010.
But traders said pre-holiday dealings were very light,
allowing for a quick dip to the 6-1/2-week bottom.
"Sellers in gold were motivated by the rising dollar,
year-end close outs, and sell stops as we moved through the
$1,099 level," said George Gero, vice president at RBC Wealth
Management in New York.
Others attributed gold's main thrust downward to the
dollar, which advanced to 3-1/2-month highs on the euro about
the same time as gold hit it's session low.
Some currency market players bought the greenback after
selling it for most of the year, in hopes U.S. economic growth
will pick up steam in 2010. []
The currency is expected to firm further in early 2010,
analysts said, curbing gold's appeal as an alternative
investment and making the precious metal more expensive for
holders of other currencies. <.DXY>
Concerns over debt problems in Dubai and Greece also helped
push the dollar higher agains the euro. []
Analysts said gold's slide to session lows accelerated
after it fell below the $1,100-an-ounce level on both spot and
futures prices. Lower volumes also sped the decline.
Gero said a recent loss in open interest of 9,800 futures
contracts was another indication of a deteriorating short-term
technical position
He and others also noted that the surging dollar also
slammed crude oil prices. Oil's rise had underpinned the
precious metal because of inflationary implications.
In a quick turnaround, some players exited the inflationary
hedge as oil prices fell toward $72 a barrel. []
President Charles Evans of the Chicago Federal Reserve Bank
said in a television interview he expects the U.S. economy to
grow 3.0 to 3.5 percent over the next 18 months, and low
inflation will give the central bank room to keep monetary
policy easy for an extended period. []
Analysts said Evans' benign inflation outlook contributed
to selling of gold, which is used as an inflation hedge and
tends to rise with inflation fears.
"There'll be a better time to buy," said Robin Bhar, an
analyst at Calyon, adding that longer-term the gold rally still
has more steam left.
"Its not the end of the gold story yet."
Analysts also see bullion prices stalling in the short-term
due to weak physical buying.
GOLD FUTURES
Noncommercial net long U.S. gold futures positions rose 0.7
percent to 256,108 lots in the week to Dec. 15 from 254,429
lots, a weekly report by the U.S. Commodity Futures Trading
Commission showed. []
The week-on-week rise was the first in three weeks.
Meanwhile, the world's largest gold-backed exchange-traded
fund, SPDR Gold Trust <GLD>, said its holdings stood at
1,126.611 tonnes as of Dec. 18, up 6.097 tonnes or 0.5 percent
from the previous business day. Holdings hit a record high of
1,134.03 tonnes on June 1. []
Silver was at $16.97 an ounce from $17.26 and platinum
<XPT=> was at $1,414 from $1,427.50. Palladium <XPD=> was at
$360.50 from $359.50.
On COMEX, March silver futures <SIH0> ended 28.5 cents
lower at $17.0350, NYMEX January platinum <PLF0> lost $5.80 to
end at $1,423.50 an ounce, and March palladium <PAH0> finished
with $2.50 declines at $365.40 an ounce.
Close Change Pct 2008 YTD
Chg Close % Chg
US gold <GCG0> 1096.00 -15.5 -1.4 884.3 23.9
US silver <SIH0> 17.035 -0.285 -1.6 11.295 50.8
US platinum <PLF0> 1423.50 -5.80 -0.4 941.50 51.2
US palladium <PAH0> 365.40 -2.50 -0.7 188.70 93.6
Prices at 3:53 p.m. EST (2053 GMT)
Gold <XAU=> 1090.95 -21.30 -1.9 878.20 24.2
Silver <XAG=> 16.96 -0.30 -1.7 11.30 50.1
Platinum <XPT=> 1414.00 -13.50 -0.9 924.50 52.9
Palladium <XPD=> 360.50 1.000 0.3 184.50 95.4
Gold Fix <XAUFIX=> 1105.50 -7.75 -0.7 836.50 32.2
Silver Fix <XAGFIX=> 17.27 -4.00 -0.2 14.76 17.0
Platinum Fix <XPTFIX=> 1429.00 1.00 0.1 1529 -6.5
Palladium Fix<XPDFIX=> 368.00 2.00 0.5 365.0 0.8
(Additional reporting by Rebekah Curtis in London; Editing by
David Gregorio)
