* Weak dollar supports gold, high prices stem ETF flows
* Gold gains more than 2 pct this week on weak dollar
* SPDR gold ETF holdings <XAUEXT-NYS-TT> flat in past week
By Chikako Mogi
TOKYO, May 22 (Reuters) - Gold held steady on Friday near a
two-month high, with investors turning to the safe-haven asset
as the dollar remained weak and as U.S. data on jobless claims
and business conditions dented hopes for a quick return to
growth.
Gold has risen about 2.6 percent this week, and traders
said its upside was likely to become more limited as current
prices prompt investors to take profit while wary investors
halt investment in gold-backed exchange-traded funds.
Spot gold <XAU=> was steady at $952.65 per ounce at 0242
GMT, little changed from New York's notional close of $953.40.
Gold rose as high as $955.95 on Thursday, its highest since
March 23. In March, gold prices rose as high as $966.
U.S. gold futures for June delivery <GCM9> edged up 0.2
percent to $953.40 per ounce from $951.20 on the COMEX division
of the New York Mercantile Exchange on Thursday.
Speculators have been boosting their holdings in U.S. gold
futures, another reason the market may be getting a bit
stretched given that buying has been driven by external factors
such as the currency and stocks, said a senior dealer at a
Japanese trading house.
"The market is now at a level where technicals will set the
direction, with traders watching if stop-loss orders above the
highs for March will be hit," the dealer said, saying
trend-following commodity trading advisers (CTAs) have been
placing such orders at various levels.
The dealer said while players may wait to take action until
the June gold futures contract rolls over next month, the
dollar's further slide or sharp stock losses could hit the
technical triggers.
Gold's relative strength index (RSI), a measure of whether
the metal is overbought or oversold, stood at 76 at Thursday's
close. The market views an RSI of 30 or less as oversold and 70
or more as overbought.
The Obama administration is preparing to steer General
Motors <GM.N> into bankruptcy next week, The Washington Post
reported on Thursday, citing sources familiar with the
discussions. []
Traders said the U.S. automakers' bankruptcy, a factor
which would normally spur more safe-haven buying of gold, was
likely to have been factored in by market players and could
even trigger profit taking given gold's current high price.
They also said gold had been weighed down by selling from
India, the world's largest gold consumer, and Vietnam, when
prices jumped.
But supportive of gold was data on Thursday suggesting that
the U.S. economic recovery, when it arrives, will be a long
slog, with a key factory index showing only marginally less
weakness and unemployment tipped to hit double-digit levels.
Markets were also slammed by suggestions of the unthinkable --
that the United States could lose its coveted triple-A credit
rating. []
Also buoying bullion was the greenback, which fell to its
weakest in almost five years against a basket of currencies as
concerns about growing U.S. government debt prompted investors
to sell dollar assets from stocks to bonds. []
Cash flowing into the world's largest gold-backed
exchange-traded fund, the SPDR Gold Trust <GLD>, has paused
since rising on May 13 for the first time since they began
declining after hitting a record high on April 9. Its holdings
were unchanged at 1,105.62 tonnes on May 21. []
Precious metals prices at 0300 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 952.20 -1.20 -0.13 8.19
Spot Silver 14.47 -0.04 -0.28 27.83
Spot Platinum 1148.00 -0.50 -0.04 23.18
Spot Palladium 231.50 0.50 +0.22 25.47
TOCOM Gold 2896.00 12.00 +0.42 12.55
17451
TOCOM Platinum 3511.00 -30.00 -0.85 32.39
5960
TOCOM Silver 436.50 1.00 +0.23 36.71
160
TOCOM Palladium 713.00 -11.00 -1.52 29.64
106
Euro/Dollar 1.3937
Dollar/Yen 94.17
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
(Editing by Ben Tan)
