(Recasts, updates with quotes, closing prices, market
activity, adds NEW YORK to dateline)
By Frank Tang and Atul Prakash
NEW YORK/LONDON, April 1 (Reuters) - Gold prices tumbled to
a two-month low below $880 an ounce on Tuesday as a dollar rise
and de-leveraging amid a U.S. stock rally triggered a heavy
sell-off in all precious metals.
Gold <XAU=> hit a low of $872.90 and was at $884.20/885.4
an ounce at 2:15 p.m. EDT (1815 GMT), against $916.20/917.00
late in New York on Monday, when it had fallen 2 percent.
The yellow metal has fallen about 15 percent since hitting
a record high of $1,030.80 two weeks ago.
"Given the elevated level of speculative interest, we would
not rule out a deepening of the current correction in prices,"
said Suki Cooper, precious metals analyst at Barclays Capital.
"However, the overall environment for gold remains positive
over the forthcoming months," she said, adding the dollar was
not expected to rise markedly against the euro in the short
term, given the likelihood of poor U.S. economic data this
week.
Jonathan Jossen, an independent floor trader in New York,
said that gold was pummeled as funds were leaving all
commodities in droves.
"We watched heavy fund selling in the futures all day
yesterday. Nobody looked and said 'OK, here is the bottom and
let's get back into the gold market,'" Jossen said.
Jossen also cited a negative gold lease rate <LGLR> last
week, which signaled possible central bank selling.
The dollar gained broadly on a better-than-expected report
on U.S. manufacturing activity for March.
In the first quarter, however, the dollar still registered
its biggest quarterly loss versus the euro in four years.
A report on Tuesday showed U.S. factory activity contracted
for a second straight month in March. The market was also
waiting for Friday's jobs figures, which are expected to show
U.S. employers cut payrolls in March for the third straight
month.
In industry news, Turkey's gold bullion imports fell in
March by 95 percent from February to their lowest-ever monthly
figure of 675 kilograms (1,485 pounds). []
Meanwhile, Italy also reported a sharp drop in gold jewelry
demand. []
U.S. gold futures for June delivery <GCM8> on the COMEX
division of the New York Mercantile Exchange settled down
$33.70, or 3.7 percent, at $887.80 an ounce.
"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," James Moore, analyst
at TheBullionDesk.com, said in a market report.
Platinum <XPT=> slipped to a one-week low of $1,888 an
ounce and was at $1,918/1,928, against $2,005/2,025 in New York
late on Monday. It has fallen more than 17 percent since
hitting a record $2,290 on March 4 as a power crisis in top
producer South Africa has hit output.
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=> had bottomed at $16.32 and was at
$16.79/16.84 an ounce, the lowest since early February, down
from $17.27/17.32 late in New York on Monday.
Palladium <XPD=> fell to $435/440 an ounce from its Monday
close of $438/443.
