* Profit taking weighed after recent sharp rally
* GLD ETF holdings hit record for 5 straight sessions
* Gold inverse link with dollar seen weakened
(Recasts, updates with quotes, closing prices, adds NEW YORK
to dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Jan 27 (Reuters) - Gold held below $900 an
ounce on Tuesday, giving up some of the previous sessions'
gains as easing risk aversion dampened interest in the precious
metal.
"It's primarily profit-taking because it has been a really
good run since we hit the $800-low on Jan 15. I like the tone
of the market, and I think we are still poised to make higher
prices," said Scott Meyers, senior analyst of Pioneer Futures.
U.S. gold for February delivery <GCG9> settled down $9.30,
or 1 percent, at $899.50 an ounce on the COMEX division of the
New York Mercantile Exchange. The contract had gained as much
as $100 since it touched a session low of $801.50 on Jan 15.
Spot gold <XAU=> was at $895.90 an ounce at 3:15 p.m. EST
(2015 GMT), down 0.8 percent from the last trade of $902.65 on
Monday.
"One of the things that has really helped gold a lot has
been the issues in the banking system," Michael Widmer, an
analyst at BNP Paribas, said.
"Looking at the news flow over the last few days, there was
a bit of relief after Barclays' announcement (on its
performance)," he said. "That took away some of the immediate
buying (of gold)."
On the currency markets, typically a key driver of gold,
the euro ceded early gains after hitting a one-week high versus
the dollar. However, this failed to pressure gold as it lifted
from lows. []
Gold typically moves in the opposite direction to the
dollar, but its usual relationship with the currency has
weakened, with both assets slipping earlier on Tuesday as risk
aversion eased.
"A stronger dollar implies panic about the economic outlook
but should mean a weaker gold price, in theory," Daniel Smith,
an analyst at Standard Chartered, said.
"The fact that that (relationship) has broken down
highlights how worried people are about where they can put
their money and who they can trust."
A Reuters survey of 52 analysts published on Monday showed
most expect gold to hold its ground in 2009 despite expected
falls in other asset prices, on worries over the global
economic outlook and turmoil in the financial markets.
<PREC/POLL>
Investment in physically backed products such as
exchange-traded funds has been strong in recent weeks as
investors seek a safe store of value.
Holdings of New York's SPDR Gold Trust <GLD> inched up to a
new record for the sixth consecutive session on Monday, and
have climbed more than 52 tonnes since the beginning of the
year.
London-based ETF Securities said its gold-backed ETFs saw
inflows of 420,000 ounces last week.
GOLD JEWELRY SENSITIVE TO PRICES
However, gold jewellery demand remains weak, dealers say.
"As the demand for jewellery is very sensitive to price
movements, demand for gold from India, Turkey and the Middle
East, the main centers of the gold jewellery industry, should
continue to weaken," said Commerzbank.
Silver <XAG=> softened in line with gold to end at $11.97
an ounce, down 0.6 percent from its previous close of $12.04 an
ounce late on Monday.
The Reuters survey showed most analysts expected silver
prices to fare better than those of platinum and palladium, as
risk aversion boosts its appeal as a safe haven.
[]
The platinum group metals are also under pressure from
gold's fall. Both platinum and palladium suffered in recent
months from fears over falling demand from carmakers, who
account for around half of global consumption.
Platinum <XPT=> was at $948.00 an ounce, down 1.2 percent
from its last finish of $959.59, while palladium <XPD=> traded
at $188.50 an ounce, down 0.8 percent from its previous close
of $190 on Monday.
(Editing by Christian Wiessner)
