(Recasts, with quotes, closing prices, market activity, adds
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By Frank Tang and Atul Prakash
NEW YORK/LONDON, April 23 (Reuters) - Gold prices shed more
than 2 percent on Wednesday as the dollar gained ground against
the euro, prompting bullion investors to liquidate long
positions amid weak buying sentiment, traders said.
Spot gold <XAU=> sank to an intraday low of $897.10 an
ounce and was at $905.50/906.70 by New York's last quote at
2:15 p.m. EDT (1815 GMT), well below levels of $920.65/922.05
late in New York trade on Tuesday.
People were unwinding their long positions on gold, after
the metal's recent rally, said analyst Daniel Hynes of Merrill
Lynch:
"We've seen net long positions on the COMEX decrease
recently and I think we're seeing a continuation of that
movement out of gold just at the moment," he said.
The U.S. active gold contract for June delivery <GCM8>
settled down $16.20, or 1.8 percent, at $909 an ounce.
Gold held in New York-listed StreetTRACKS Gold Shares
<GLD.P><XAUEXT-NYS-TT>, the world's largest gold-backed
exchange-traded fund, fell to 623.41 tonnes on Tuesday from
641.82 tonnes the previous day.
The metal hit a three-week high of $952.60 last week, but
attempts to stay above $950 were met by profit-taking. Dealers
noted some physical demand, but it was not enough to trigger
another rally toward last month's record $1,030.80.
"In the near term, gold is likely to continue to take its
lead from dollar movements," said Suki Cooper, precious metals
analyst at Barclays Capital.
The euro pulled back from a record peak versus the dollar
after a fall in manufacturing activity suggested that economic
growth in the euro zone is starting to slow.
A firmer dollar makes gold costlier for holders of other
currencies and often lowers bullion demand. The metal is also
generally seen as a hedge against oil-led inflation.
RANGE-BOUND TRADE
U.S. crude futures <CLc1> ended slightly higher on
Wednesday, after hitting a record high $119.90 per barrel on
Tuesday, lifting gold off its session lows.
George Nickas, broker with FC Stone in New York, cited the
nervous, unexpected mid-week long liquidation for gold's
decline.
"And even though gold has in the past found support at $900
an ounce, there is a big question that whether or not the
market will be holding it today," Nickas said.
In addition, the U.S. Federal Reserve is expected to lower
benchmark interest rates to 2 percent from the current 2.25
percent at its next meeting on April 30.
A rate cut tends to lower the dollar's appeal, which in
turn often lifts bullion demand.
Platinum <XPT=> fell 2 percent to $1,975.50 an ounce on the
declines in gold, and was last quoted at $1,992/2002 against
$2,017.50/2,027.50, its Tuesday U.S. close.
News that Lonmin Plc, the world's third biggest platinum
producer, had again cut its full-year sales target following
power problems in South Africa had little impact on prices,
said Hynes from Merrill Lynch.
"I think a large amount of that was already priced into the
market. Other than that, there is no real catalyst, so it is
tending to drift with gold," he said.
Platinum also faced pressure from news that Mitsui Mining
and Smelting had developed a new catalyst for diesel car
engines that replaces the use of platinum with silver, a less
conventional but much cheaper metal.
Silver <XAG=> edged down to $17.16/17.26 an ounce from
$17.64/17.73 late in New York on Tuesday, while palladium
<XPD=> was off at $441.50/447.50 versus its previous finish of
$451/457.
(Additional reporting by Tamora Vidaillet in London; Editing
by Walter Bagley)
