* Gold retreats sharply on technical sell signal
* Gold to see downward correction before resuming up-trend
* Coming up: U.S. June consumer confidence on Tuesday
(Recasts, updates prices, adds comments, changes byline,
dateline, previous LONDON)
By Frank Tang
NEW YORK, June 28 (Reuters) - Gold retreated 1 percent on
Monday on a sharp technical sell-off and dwindling safe-haven
buying, after an initial rally fizzled that would have lifted
gold to an all-time high.
Rick Bensignor, chief market strategist at investment
banking group Execution Noble LLC, said a technical sell signal
triggered pullback based on a high reading of TD Sequential,
which institutional players used to help define exhaustion
points of trends.
"With that in place, institutional players would definitely
be more apt to be selling gold or 'shorting' gold as a trade,"
Bensignor said.
Bensignor said gold's daily sentiment index was also at an
extremely high 90 percent bullish on Monday, and added to the
metal's vulnerability.
Spot gold <XAU=> was at $1,237.45 an ounce by 12:44 p.m.
EDT (1644 GMT), compared with $1,253.40 in New York on Friday.
Gold sharply came off from a high of $1,262.45 earlier in
the session, less than $3 under its all-time high at $1,264.90
an ounce set last Monday, as economic jitters pressured the
euro and global equity markets.
Analysts, however, said gold should be supported by
investors' concerns over the levels of euro zone debt and the
stability of the region's banking system persisted.
"Really the big driver is investor perception, investor
risk appetite and do we see any nervousness over the European
(debt) issue," said Societe Generale analyst David Wilson.
"Sentiment is still quite brittle, so we can get intraday
moves in either direction, but the longer gold stays above
$1,250 and consolidates, the more likely we are for a leg up
rather than a leg down," he said.
Maintaining the bullish undertone for gold were comments
from U.S. intelligence officials that Iran has enough fissile
material for two atomic bombs, traders said. []
Global equity markets were largely unperturbed after world
leaders abandoned a global bank levy and eased the timetable
for new capital requirements at this weekend's G20 summit.
[]
"The underlying safe-haven concerns that have supported
prices -- the economic environment, Europe's fiscal outlook and
the longer-term prospects for inflation, remain," said David
Moore, commodities strategist at Commonwealth Bank of
Australia.
"The G20 hasn't had a significant impact on markets, and
while concerns about Iran's nuclear capacity are nothing new,
there seems to be additional clarity."
U.S. gold futures for August delivery <GCQ0> were down
$19.50, or 1.5 percent, to $1,236.70 an ounce.
"These are high prices to buy gold at," said one trader.
"Technically, the upward trend is intact, but when you near
record highs, trade is always jittery," the trader added.
U.S. DATA IGNORED
Gold was little moved by data that showed U.S. consumer
spending rose more than expected in May, even as savings
touched their highest in eight months, while a measure of
inflation showed fairly muted core price pressures.
[]
Wang Tao, a Reuters market analyst, said spot gold <XAU=>
may correct to $1,166.50 per ounce in July as the technical
signals turn bearish with a leading diagonal pattern in
formation and an appearance of a bearish divergence on the
Relative Strength Index (RSI) indicator.
For a graphic:http://link.reuters.com/jyd64m
Among other precious metals, silver <XAG=> was at $18.70 an
ounce, from $19.04 late in New York on Friday, while in the
platinum group metals complex, platinum <XPT=> was down 0.2
percent at $1,564 and palladium <XPD=> was down about 1.4
percent at $467.90.
(Additional reporting by Amanda Cooper in London; Editing by
Sofina Mirza-Reid)
