* Charts improve as market breaks above 20-day moving
average
* Inflation concerns replace deflation worry to support
gold
* SPDR gold holdings <XAUEXT-NYS-TT> unchanged
By Chikako Mogi
TOKYO, July 16 (Reuters) - Gold prices fell on Thursday for
the first time in six days as a recovery in the dollar spurred
profit-taking on bullion's jump to a two-week high the previous
day when U.S. price data stoked concerns about rising
inflation.
Optimism about economic recovery prospects drove stocks
higher, encouraging investors to take more risks and weighing
on the dollar, while inflation worries returned after the U.S.
price data came in stronger than expected.
Gold investors continued to take cues from the dollar, as a
rise in the currency reduces bullion's appeal as an alternative
to U.S. currency and assets, but emerging inflation concerns
are helping to improve gold's technical charts, traders said.
As the market approached a key resistance level of $950,
the rise in the dollar prompted investors to take profits, said
Louis Lok, a senior dealer at Bank of China in Hong Kong.
The whole situation "is related to the U.S. dollar, and
investors are taking profits ahead of important resistance," he
said.
"But the market is finding a new excuse to buy gold as a
hedge against inflation fears after the U.S. prices data. Any
dip will be a good opportunity to buy," he said.
The break of the 20-day moving average around $927-$930
paves the way for the market to test $950, a level it failed to
sustain when players tried to establish a floor after prices
had been steadily falling from near $990 in early June, traders
said.
"The market broke the resistance that stood at $927-928,
and that has encouraged fresh buying," Lok said.
Spot gold <XAU=> eased 0.2 percent to $937.00 per ounce as
of 0614 GMT, compared with New York's notional close of $938.45
on Wednesday, when it rose to $942.30.
U.S. gold futures for August delivery <GCQ9> fell 0.2
percent to $937.30 an ounce, from $939.40 on the COMEX division
of the New York Mercantile Exchange. The August contract rose
to $942.30 on Wednesday, its highest since July 1.
Economic optimism was reinforced on Thursday as China said
its annual gross domestic product growth accelerated in the
second quarter to 7.9 percent from 6.1 percent in the first
quarter. []
News of China's surprisingly strong second quarter followed
U.S. manufacturing data which suggested the recession is
abating, and minutes from the Federal Reserve's most recent
policy-setting meeting that showed officials saw the U.S.
contraction was slowing. []
Inflation worries emerged along with the economic data, as
U.S. consumer prices rose at a slightly faster-than-expected
0.7 percent pace in June. []
Earlier this week, data showed U.S. producer prices soared
by 1.8 percent, twice as much as expected, in June for the
steepest gain since November.
Traders expected selling by major Asian players such as
Vietnam to cap prices while investment flows will likely remain
slow.
The world's largest gold-backed exchange-traded fund, the
SPDR Gold Trust <GLD>, said holdings were unchanged at 1,094.54
tonnes as of July 15, after falling 1.4 percent the day before,
its largest drop in three months. []
PRICES
Precious metals prices at 0624 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 936.75 -1.70 -0.18 6.43
Spot Silver 13.23 -0.02 -0.15 16.87
Spot Platinum 1157.50 1.50 +0.13 24.20
Spot Palladium 244.50 0.00 +0.00 32.52
TOCOM Gold 2837.00 43.00 +1.54 10.26
38784
TOCOM Platinum 3514.00 73.00 +2.12 32.50
15331
TOCOM Silver 400.80 8.70 +2.22 25.52
266
TOCOM Palladium 752.00 17.00 +2.31 36.73
187
Euro/Dollar 1.4070
Dollar/Yen 93.88
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
(Additional reporting by Risa Maeda; Editing by Clarence
Fernandez)
