* Gold, silver, platinum slip to three-week lows
* Weak U.S. home sales cast doubt on economy, lift dollar
(Recasts and updates with U.S. settlement prices; adds NEW
YORK dateline/byline)
By Barani Krishnan and Jan Harvey
NEW YORK/LONDON, Oct 28 (Reuters) - Gold prices ended lower
on Wednesday, hitting 3-week lows and breaking below technical
support at $1,030 per ounce, as a resurgent dollar eroded the
precious metal's standing as an alternative asset.
Dealers said gold also suffered from a drop in physical
demand, as the world's largest gold exchange-traded fund
reported a second daily outflow in bullion holdings.
U.S. gold futures' most-active contract, December <GCZ9>,
settled down $4.90, or 0.5 percent, at $1,030.50 an ounce on
the COMEX metals division of New York Mercantile Exchange.
Spot gold was bid at $1,027.75 an ounce at 4 p.m. EDT (2000
GMT), against $1,038.80 late in New York on Tuesday. Earlier it
touched a low of $1,026.35 an ounce.
Analysts said the correction was not surprising, given the
strength the precious metal had exhibited since early
September. Still, few were willing to bet that the rally in
gold was over.
"Gold is behaving in textbook fashion," Calyon metals
analyst Robin Bhar told Reuters. "All the long-standing 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. The up
trend remains intact."
Gold was 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 this week, prompting traders to cut risk
exposure. []
In Wednesday's session, safe-haven demand for gold was
boosted by a report showing an unexpected fall in U.S. new home
sales for September.
Sales of new single-family homes fell 3.6 percent to an
annual pace of 402,000 units from a downwardly revised 417,000
units in August, the Commerce Department said on Wednesday.
Analysts polled by Reuters had expected sales to rise to a
440,000-unit pace.
The home sales figures offset a bright spot provided by
U.S. durables goods orders, which rose a solid 2 percent in
September.[]
European shares hit a three-week low and extended losses,
as did U.S. equities [], after the U.S. homes sales data 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 $1,023 an ounce, said
analysts who study past price charts to determine future
moves.
"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 $16.09 an ounce against $16.65.
Platinum <XPT=> was at $1,300 an ounce, against $1,312,
having hit its lowest since Oct. 6 at $1,297, while palladium
<XPD=> was at $314.50, against $325.50.
(Editing by Walter Bagley)
