* U.S. crude extends losses; dollar broadly stronger
* Physical buying halts greater losses
(Recasts, adds comments/details, changes dateline pvs
Singapore)
By Michael Taylor
LONDON, Jan 13 (Reuters) - Gold hit one-month lows on
Tuesday on a firmer dollar, weaker oil and faltering demand, but
bargain hunting limited further losses.
Gold <XAU=> was quoted at $814.20/$815.60 an ounce at 1032
GMT, down from $819.35 an ounce in New York late on Monday, but
off a one-month low of $813.80 an ounce.
Gold prices have fallen around 6 percent so far in January,
after rising 8 percent in December.
"The market has rallied up quite a lot in the last
fortnight," Eugen Weinberg, a commodity analyst at Commerzbank,
said. "We had short-covering ... index funds talking about
re-weighting things and people got excited.
"Now we are back to reality where there is no demand and the
market is drifting. We are coming back to where we should be in
the first place."
The dollar was broadly firm, hitting one-month highs against
the euro, as struggling equity markets cranked up demand ahead
of a European Central Bank policy meeting on Thursday. []
Adding to the underlying negative sentiment, U.S. crude
<CLc1> fell towards $36 a barrel to its lowest level in three
weeks as further signs the world economy was slowing dampened
demand expectations. []
A stronger dollar tends to pressure gold, which is often
bought as an alternative asset to the U.S. currency, while
weaker oil prices reduce gold's appeal as a hedge against
inflation.
Gold's losses were limited by buying interest from jewellers
in Asia ahead of the Lunar New Year holidays later this month,
dealers said.
GOLD FALLS
The precious metal has bounced more than 20 percent since
falling to a 13-month low around $680 in late October. It hit an
all time high of $1,030.80 an ounce last March.
Also helping sentiment, Benguet Corp <BC.PS>, the
Philippines' fourth-biggest miner by market value, said it
suspended exploration at a copper-gold project on the island of
Mindanao due to a dispute with a local partner. []
That was offset by Yamana Gold Inc <YRI.TO>, which said it
would spend up to $350 million this year and $400 million in
2010 to boost production, while halving its dividend to help
fund its expenditures. []
However, physical demand, a key determinant of sentiment and
prices, is seen coming under pressure over the next three
months.
"Reports of low physical demand from the key demand centres
continues to be reported and this might extend for the next
couple of months," Richcomm Global Services said in a note.
Platinum <XPT=> was quoted at $927/$937 an ounce, down from
$956.00 at the New York close.
Falling car sales in China added to the gloomy outlook for
the auto industry, the largest user of platinum. Car sales
fell 8 percent in December from the previous year, the
country's official industry association said. []
"We are looking for an opportunity to turn tactical buyers
of gold -- but need to see jewellery and/or physical investment
demand recover ... before we will do so," UBS said in a note.
New York gold futures <GCZ9> were at $822.0 an ounce in
electronic trading, down 0.6 percent.
Silver <XAG=> was trading at $10.55/$10.63 an ounce versus
$10.62 an ounce on Monday, while palladium <XPD=> was at
$180.00/$188.00 from $184.00.
Investors began to turn their attentions to the ECB, which
is expected to cut key interest rates by 50 basis points to 2
percent on Thursday.
(Additional reporting by Lewa Pardomuan; editing by Sue Thomas)
