Gold extends losses on rising U.S. dollar

Enlarge Photo Gold bangles are seen inside a display case at a jewellery shop in Singapore in...

Thu, May 8 08:03 AM

SINGAPORE (Reuters) - Gold fell further on Thursday in response to a firmer U.S. dollar, but record-high crude oil above $123 a barrel was expected to cushion the fall.

Gold dropped to $865.90/866.90 an ounce from $870.85/872.05 an ounce late in New York on Wednesday but that was above last week's four-month low at $845 an ounce.

The metal has lost more than 15 percent in value since spiking to a lifetime high of $1,030.80 on March 17, mainly driven by profit taking and declines in other commodities.

"Given a lack of market direction, cash gold looks to be stabilising in a range of between $860 and $880 for now," said Kaname Gokon, deputy general manager at Okato Shoji Co's research section.

In contrast, buying from users and investors was boosting cash platinum as well as the Tokyo futures, Gokon said. "There are several buy orders for cash platinum lining up at or below $1,900," he said.

The benchmark contract for April 2009 delivery on the Tokyo Commodity Exchange ended the morning session 20 yen per gram higher at 6,355 yen, having hit the daily 300 yen limit up on Wednesday.

Spot platinum dipped to $1,945.50/1,965.50 an ounce from $1,949.50/1,969.50 late in New York but it had hit an intraday high of $1,959 an ounce on Thursday.

The euro extended losses to hit a two-month low against the dollar below $1.5300 as weak euro zone retail sales data raised concerns about downside risks to the region's economy.

In theory, a stronger dollar reduces gold's appeal as an alternative investment to currencies, bonds and stocks.

"There maybe a little bit of physical buying. It's not so great," said Ronald Leung, director of Lee Cheung Gold Dealers in Hong Kong.

"There's really no direction at all. It is still in the $850 to $880 range for a while, waiting to break either side."

Gold futures for June delivery on the COMEX division of the New York Mercantile Exchange fell $3.7 an ounce to $867.5 an ounce.

Silver edged down to $16.48/16.54 an ounce from $16.60/16.66 an ounce. Spot palladium fell to $419.50/427.50 an ounce from $420.50/428.50 an ounce.

Precious metals prices at 0206 GMT

Metal Last Change Pct chg YTD pct chg

Turnover

Spot Gold 867.40 0.25 +0.03 4.17

Spot Silver 16.49 -0.08 -0.48 11.65

Spot Platinum 1945.50 -4.00 -0.21 27.99

Spot Palladium 419.50 1.50 +0.36 13.99

TOCOM Gold 2946.00 -38.00 -1.27 -3.73 22258

TOCOM Platinum 6355.00 20.00 +0.32 19.03 12698

TOCOM Silver 562.50 -13.10 -2.28 3.97 817

TOCOM Palladium 1459.00 -8.00 -0.55 7.99 457

Euro/Dollar 1.5312

Dollar/Yen 104.73

TOCOM prices in yen per gram, except TOCOM silver which is priced in yen per 10 grams. Spot prices in $ per ounce.

(Additional reporting by Risa Maeda in Tokyo)

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