* Gold erases early gains, ETF holdings firmer
* Coming Up: U.S. ICSC chain stores yy Weekly; 1245 GMT
(Updates prices)
By Lewa Pardomuan
SINGAPORE, March 8 (Reuters) - Gold pared early gains on Tuesday and slipped
below a record high hit in the previous session as oil prices fell, but a
rebound in ETF holdings suggested that investors remained jittery about unrest
in North Africa and the Middle East.
One of Libyan leader Muammar Gaddafi's sons, Saadi, said his father had not
yet thrown his army into full battle against rebels, saving it to shield Libya
against foreign attack, and civil war could erupt if he did. But two Arab
newspapers and al Jazeera television said Gaddafi was looking for an agreement
allowing him to step down.
Spot gold fell $2.89 an ounce to $1,427.85 an ounce by 0649 GMT,
having rallied as high as $1,444.40 an ounce on Monday, a record high, as
violence flared in Libya and after the downgrade of Greece's credit rating
reignited worries about euro zone sovereign debt.
"I can say it's profit taking. It could not breach a high and it dropped
down a bit. So many people are long in the market and you have to squeeze the
longs before you reach a new high," said Ronald Leung, director of Lee Cheong
Gold Dealers in Hong Kong.
"But I don't think there will be a big drop because there's so much
uncertainty," he added.
The world's largest gold-backed exchange-traded fund, SPDR Gold Trust ,
said its holdings edged up to 1,217.295 tonnes by March 7 from 1,210.621 tonnes
on March 3, which was a 9-1/2 month low.
U.S. gold futures for April fell $6.0 an ounce to $1,428.5 an ounce
after striking a record at $1,445.70 on Monday.
U.S. crude accelerated a drop towards $104 a barrel after the Kuwaiti oil
minister said OPEC is in talks to increase production. OPEC is in consultations
regarding a potential output rise, Kuwait's Oil Minister said on Tuesday, but
added that there was no decision for the group to produce over quotas yet.
Dealers saw bargain hunting in other parts of Asia, but there were also
worries inflation could prompt countries to raise interest rates, which could
eventually curb demand for commodities.
"We've seen light buying from the physical side but there's nothing great so
far," said a dealer in Singapore. "There's a small volume of scrap export from
Indonesia, and premiums for gold bars remain at $1."
Premiums in Hong Kong were steady at $1 to $1.50 to the spot London prices.
Emerging market economies that powered the global recovery may be growing
too fast for their own good as inflation pressures build, a top International
Monetary Fund official said on Monday.
China, Brazil and other fast-growing nations have struggled to contain
inflation and control heavy inflows of investment funds. Although the IMF has
been warning for months of the risks of price pressure, the comments by the
Fund's first deputy managing director, John Lipsky, suggested the IMF is growing
increasingly concerned.
Silver was steady after rising as high as $36.70 an ounce on Monday,
a 31-year peak, on the back of rising gold prices and physical demand from
China.
"I heard some big importers have bought silver because of talk the price
will go up as high as $120 an ounce. But I think the main reason why people are
buying silver is because the price is much cheaper than gold," said a dealer in
Hong Kong.
Holdings in the world's largest silver-backed exchange-traded fund, iShare
Silver Trust , rose to 10,898.14 tonnes by March 7, their highest since
early January, from 10,794.89 tonnes on March 3.
Platinum and palladium tracked declines in equities.
In other markets, the euro stalled on Tuesday, while Asian stocks remained
under pressure as investors fretted that higher energy prices would stunt the
global economic recovery.
Market players have been focused on the prospect of a European Central Bank
interest rate rise as early as next month, but the euro zone debt crisis
returned to the fore on Monday, when Moody's slashed Greece's sovereign rating
by three notches.
Precious metals prices 0649 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 1427.85 -2.89 -0.20 0.59
Spot Silver 35.68 -0.17 -0.47 15.62
Spot Platinum 1804.49 -12.00 -0.66 2.09
Spot Palladium 781.75 -4.22 -0.54 -2.22
TOCOM Gold 3786.00 -27.00 -0.71 1.53 59492
TOCOM Platinum 4855.00 -71.00 -1.44 3.39 21773
TOCOM Silver 93.50 -2.10 -2.20 15.43 2305
TOCOM Palladium 2065.00 -99.00 -4.57 -1.53 689
Euro/Dollar 1.3974
Dollar/Yen 82.33
TOCOM prices in yen per gram. Spot prices in $ per ounce.
(Reporting by Lewa Pardomuan; Editing by Ed Lane)
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