* Gold, silver, platinum slip to three-week lows
* Disappointing U.S. homes data knocks stocks, lifts dlr
(Updates prices, adds detail of U.S. data)
By Jan Harvey
LONDON, Oct 28 (Reuters) - Gold prices slipped to a
three-week low in Europe on Wednesday, testing technical support
above $1,030 an ounce, as the dollar index <.DXY> edged higher,
eroding interest in the precious metal as an alternative asset.
Gold is also suffering from weakness in physical demand,
with the world's largest gold exchange-traded fund reporting a
second daily outflow on Tuesday, dealers said.
Spot gold <XAU=> was bid at $1,033.60 an ounce at 1525 GMT,
against $1,038.80 late in New York on Tuesday. Earlier it
touched a low of $1,030.10 an ounce.
Analysts say this week's price correction is not surprising,
given the strength of its upward move since early September.
"Gold is behaving in textbook fashion," Calyon metals
analyst Robin Bhar told Reuters. "In any bull market you have to
confirm support, and in this market, support is in the $1,030
area, which was the previous high."
He said while interest in physical gold jewellery and ETFs
was waning, possibly supporting the case for a further pullback,
both this and the dollar rebound looked to be temporary.
"All the longstanding bull factors for gold -- inflation,
dollar weakness, unhappiness with the monetary system as it
stands and what governments are doing to their paper currencies
-- are still there," he said. "The uptrend remains intact."
U.S. gold futures for December delivery <GCZ9> on the COMEX
division of the New York Mercantile Exchange fell $1.10 to
$1,034.50 an ounce.
Gold is under pressure from a rise in the dollar index,
which gauges the U.S. unit's performance against six major
currencies. The dollar has benefited from a slide in global
stock markets, which prompted traders to cut risk exposure.
[]
European shares hit a three-week low on Wednesday and
extended losses after data showed sales of U.S. new homes
unexpectedly fell in September. [] []
U.S. equities also extended losses, while world stocks
<.MIWD00000PUS> slid to three-week lows as investors worried
about the pace of economic recovery. []
CHART SUPPORT EYED
From a technical perspective, support for a move higher in
gold is reliant on it holding firm above its previous
longstanding record high near $1,030 an ounce, analysts who
study past price charts to determine future moves said.
"As long as it stays above the $1,028/23 support area,
(gold) will remain near-term bullish and once again target...
$1,066.30 and the mid-October high at $1,071.29," Commerzbank
said in a note.
"Failure at $1,023 would indicate that a slip towards the
55-day moving average at $1,001.71 and the major psychological
$1,000 mark is probable."
Physical gold demand remains relatively lacklustre, with the
largest gold ETF, New York's SPDR Gold Trust <GLD>, reporting a
second consecutive daily outflow on Tuesday. []
Gold buyers in India, the world's biggest bullion consumer
last year, trickled in as falling prices sparked some bargain
hunting, but a weak rupee dented buying interest. []
Among other precious metals, spot silver <XAG=> was the
biggest faller, as losses in gold pressured it to a three-week
low of $16.25. It was later at $16.32 an ounce against $16.65.
Platinum <XPT=> was at $1,306 an ounce against $1,312,
having hit its lowest since Oct. 6 at $1,303.50, while palladium
<XPD=> was at $319.50 against $325.50.
The metals are being supported by supply concerns in major
producer South Africa and hopes demand from carmakers, the main
buyers of platinum and palladium, will improve.
(Editing by Sue Thomas)
