* Gold holds near last week's 18-month high
* Dealers wary of liquidation, support seen at $995
* Main consumer India buys gold during festive season
By Lewa Pardomuan
SINGAPORE, Sept 23 (Reuters) - Gold extended gains on
Wednesday, moving closer to an 18-month high struck last week,
after the U.S. dollar tumbled to its weakest in a year against
the euro, but worries about heavy liquidation persisted.
With speculators holding record long positions in New York,
the rise in gold price has stoked fears of a repeat of last
year's selling, when bullion lost more than $100 only a few
days after it powered to a record $1,030.80 an ounce in March.
"The market is quite concerned there could be some
unwinding of those positions. If they really unwound heavily, I
think we'll go back to $950 very quickly. I suspect there's a
pretty strong floor at $995," said Mark Pervan, senior
commodities strategist for ANZ, referring to this week's 1-week
low.
Spot gold <XAU=> rose as high $1,017.80 an ounce before
slipping to $1,016.75 by 0527 GMT, still up $2.95 from New
York's notional close and within striking distance of an
18-month high of $1,023.85 hit on Thursday. Gold has gone up as
much as 16 percent this year.
Some investors were reluctant to buy heavily before the
U.S. Federal Reserve announces the outcome of its two-day
meeting later in the day, although markets believe the Fed will
signal plans to maintain loose monetary policy well into 2010.
"At these levels here, obviously they need a further
catalyst to get an upside. At the moment, the market will be
coy on the basis that we've got now record high long positions
on the CFTC," said Pervan.
Noncommercial net long positions in gold futures in New
York at an all-time high of 235,647 lots for the week ended
Sept. 15 worried investors as it could spark a long
liquidation. []
The euro <EUR=> rose past resistance around $1.4825 to a
fresh one-year high of $1.4840 before it slipped to $1.4815,
erasing some of gold's gains. []
Against a basket of currencies, the dollar <.DXY> was down
0.2 percent at 75.945. The index has shed over 2.5 percent this
month as speculators dumped the dollar on rising confidence in
a global recovery and expectations that rates will stay at
rock-bottom levels there.
U.S. gold futures for December delivery <GCZ9> added $3.10
an ounce at $1,018.60 on the COMEX division of the New York
Mercantile Exchange, having hit a high of $1,020.4.
The physical sector saw buying from main consumer India,
and dealers also waited for the outcome of a Group of 20
nations summit later this week, when leaders may call for
economic stimulus to stay in place, a move which could give a
boost to riskier assets. []
"India continues to buy but I guess other consumers are
quite cautious this time around. I don't think people dare to
cash in right now especially after the market has bounced back
from below $1,000," said a dealer in Singapore.
India's gold purchases have picked up as the festive season
gained steam in the world's largest consumer.[]
The world's largest gold-backed exchange-traded fund, the
SPDR Gold Trust <GLD>, said its holdings stood at 1,101.735
tonnes as of Sept 22, unchanged from the previous day.
<XAUEXT-NYS-TT> []
Precious metals prices at 0527 GMT
Metal Last Change Pct chg Day ago pct MA 30
RSI Spot gold $1016.75 $2.95 +0.29% +13.35% $860.10
67
Spot silver $17.17 $0.07 +0.41% +43.32% $11.29
69
Spot plat $1336.00 $4.00 +0.30% +40.78% $948.98
66
COMEX gold $1017.20 $129.00 +14.52% +13.09% $857.64
67
Currencies
Euro/dlr $1.482 $0.168 +12.79% +12.44%
Dlr/yen 90.70 0.32 +0.35% +2.00%
(Editing by Sanjeev Miglani)
