(recasts, adds quotes, changes prices, pvs SINGAPORE)
By Atul Prakash
LONDON, April 1 (Reuters) - Gold tumbled to a two-month low
below the key $900-an-ounce level on Tuesday as a jump in the
dollar against the euro dampened the metal's appeal as an
alternative investment and triggered bullion selling.
Falling prices of oil also put pressure on gold, which is
traditionally seen as a hedge against inflation. Other metals
also suffered heavy losses, with silver slipping 3.8 percent to
a two-month low and platinum falling about 4 percent.
Gold <XAU=> hit a low of $888.30 and was at $891.60/892.50
an ounce at 1012 GMT, against $916.20/917.00 late in New York on
Monday, when it fell 2 percent. The metal has fallen about 14
percent since hitting a record high of $1,030.80 two weeks ago.
"Over the past couple of days, a firmer dollar and weaker
oil prices certainly weighed on the gold market and should do so
in the short term," said Daniel Hynes, metals strategist at
Merrill Lynch.
"We still believe that the outlook is strong and expect to
see a rebound, but for the moment those headwinds will keep any
gains relatively limited."
Oil fell below $101 a barrel, extending losses from a day
earlier that were triggered by a recovery in Iraqi crude
exports. A forecast of lower U.S. gasoline stocks limited the
drop.
The dollar rose versus the Swiss franc, the euro and
sterling after European bank UBS announced an additional $19
billion of writedowns, highlighting that credit market woes were
not just a U.S. problem.
A firmer dollar makes gold costlier for holders of other
currencies and often lowers bullion demand.
DOLLAR MAY WEAKEN AGAIN
But the dollar registered its biggest quarterly loss versus
the euro in four years on Monday. This followed data showing a
sharp gain in euro zone inflation which suggested a continued
divergence in monetary policy between the rate-slashing Federal
Reserve and the hawkish European Central Bank.
Analysts said dollar weakness could follow, particularly if
the Institute for Supply Management's manufacturing index
disappoints at 1400 GMT. The market is also waiting for Friday's
jobs figures, which are expected to show that U.S. employers cut
payrolls in March for the third straight month.
"Given gold's recent movements, the yellow metal will remain
vulnerable to selling pressure in the coming sessions,
particularly as the second quarter is traditionally weaker than
the first due to general market cycles," said James Moore,
analyst at TheBullionDesk.com.
In industry news, Turkey's gold bullion imports fell in
March by 95 percent compared with February to their lowest-ever
monthly figure of 675 kg. Imports fell 13.2 percent year-on-year
in the first quarter to 32.3 tonnes. []
In other markets, U.S. gold futures for June delivery <GCM8>
on the COMEX division of the New York Mercantile Exchange fell
$27 an ounce to $894.50 in electronic trade.
Spot platinum <XPT=> fell nearly 4 percent to a one-week low
of $1,925 an ounce and was last quoted at $1,935/1,945, compared
with $2,005/2,025 an ounce in New York late on Monday.
The metal has fallen 16 percent since setting a record high
of $2,290 an ounce on March 4, as a power crisis in top producer
South Africa hit production.
South Africa's state power utility Eskom was near a deal to
buy more electricity from Mozambique's Cahora Bassa development
to try to ease the problem, a Mozambican official said.
[]
Silver <XAG=> fell to a low of $16.52/16.57 an ounce, the
lowest since early February, from $17.27/17.32 in New York.
Palladium <XPD=> slipped to $432/437 an ounce from $438/443.
(Reporting by Atul Prakash; editing by Elizabeth Piper)
