(Recasts, updates with quotes, closing prices, market
activity, changes dateline to NEW YORK, pvs LONDON)
By Frank Tang
NEW YORK, March 17 (Reuters) - Gold ended higher on Monday,
holding slim gains even as a late-session selloff ate into
solid early gains that had pushed bullion to a record high
overnight on panic buying amid global financial turmoil.
Bullion should find support in the near term as investors
flee to safe-haven assets while the dollar plumbs record lows
and a recession-wary Federal Reserve cuts interest rates.
Dealers said gold will remain volatile in the near term,
with prices in uncharted territory ahead of a rate-setting
decision by the U.S. central bank on Tuesday.
Bill O'Neill, managing partner of LOGIC Advisors in Upper
Saddle River in New Jersey, said gold rose on panic buying
during the Asian and European trading sessions. But gold gave
back some gains when global stock markets did not deteriorate
further.
"I think some people let go of positions (after) gold ran
up on thin volume initially," O'Neill said.
Spot gold <XAU=> was quoted at $1,001.00/1,001.80 an ounce
by New York's last quote at 2:15 p.m. EDT (1815 GMT) after
falling to a low of $998.90. Earlier, it hit a record high of
$1,030.80, against its close of $996.90/997.70 in New York late
on Friday.
The U.S. active gold contract for April delivery <GCJ8> on
the COMEX division of the New York Mercantile Exchange settled
up $3.10 at $1,002.60 an ounce.
Other key precious metals finished lower, with platinum
declining more than 4 percent to a one-week low and palladium
slipping over 6 percent in a broad-based sell off, analysts
said.
"It looks as though there is just profit-taking after a
great run. There could be selling to meet margin calls as
equities tank," said David Thurtell, analyst at BNP Paribas.
European shares finished 4 percent lower, led lower by
banks, while U.S. stocks erased early losses but the
broad-based Standard & Poor's 500 Index was still slightly
lower by afternoon trade.
A fire sale of Bear Stearns Cos Inc <BSC.N> stunned Wall
Street and pummeled global financial stocks on Monday on fears
that few banks are safe from deepening market turmoil.
Investors often turn to gold as insurance in times of
financial market crises and economic uncertainties.
Sinking crude oil prices also weighed on gold, which is
used as a hedge against inflation. U.S. crude futures <CLc1>
had fallen nearly $7 a barrel in afternoon trade. It settled
down $4.53 to $105.68 a barrel in mid-morning trade.
The dollar tumbled to a 12-1/2 year low against the
Japanese yen and record lows against the euro and Swiss franc
as emergency liquidity-boosting measures by the Federal Reserve
over the weekend failed to ease worries about the U.S.
financial sector.
MARKET GETS SUPPORT
Some analysts said gold should get support from the
financial market concerns and a weaker dollar.
"With the concerns surrounding the other brokerages and
banks, it's going to keep the gold market very steady, and it's
going to keep the demand for hard assets," O'Neill said. He
expected gold futures could retest record highs in the near
term
Wall Street now expects the Fed could slash the Fed Funds
rate by another 100 basis points to 2 percent at the end of the
Federal Reserve Open Market Committee meeting by Tuesday
afternoon. <FEDWATCH>
In other metals, silver <XAG=> set a 27-year high at $21.24
before slipping to $19.92. It was last quoted at $20.35/20.41
an ounce, against its Friday's finish of $20.63/20.68 in New
York.
Platinum group metals also tumbled in a broad commodities
sell-off on Monday. Speculators kept taking profits after top
producer South Africa said last week it would boost electricity
to gold mines following a power crisis.
Platinum <XPT=> fell over 4 percent to $1,975 an ounce and
was last at $1,980/1,990, against its Friday close of
$2,070/2,080. Palladium <XPD=> declined to $465/470 an ounce
from $509/514 late on Friday in New York.
(Additional reporting by Anna Ringstrom and Atul Prakash in
London; Editing by David Gregorio)
