* Gold steady below $980, continues to eye $1,000
* Investors continue to track greenback
By Miho Yoshikawa
TOKYO, June 2 (Reuters) - Gold was steady on Tuesday as
investors continued to track moves in the dollar, with the metal
remaining within striking distance of the key $1,000-an-ounce
mark.
Bullion touched $988.50 on Monday, the highest level since
February 24, as strong U.S. data reduced safe-haven demand for
the dollar pushing it to its lowest level this year against the
euro and a basket of currencies.
Oil, which hit a near seven-month high on Monday, also
reignited inflation fears, helping to lift gold.
"Oil is adding to what is already a potentially inflationary
picture, but the dollar is ultimately the main driver at the
moment," said Darren Heathcote, head of trading at Investec
Australia.
He said he expected the dollar to continue to weaken as risk
appetite returns.
Gold <XAU=> was at $974.75 at 0600 GMT, compared to New
York's notional close of $973.95, slipping from a high of
$977.75.
U.S. gold futures for August delivery <GCQ9> were at $976.10
per ounce, down 0.4 percent from the previous day's settlement.
A softer dollar typically boosts gold, both because bullion
can be bought as an alternative to the U.S. currency and because
its weakness makes dollar-priced commodities cheaper for non-U.S.
buyers.
The two assets had given up their traditional relationship as
both reacted primarily to risk aversion. But as optimism grows
that the worst of the economic downturn is over, their usual
trading dynamic has returned.
The dollar steadied on Tuesday after hitting its lowest this
year against the euro and a basket of currencies as reassuring
economic data and a rally on Wall Street reduced the allure of
the greenback. []
U.S. crude futures slipped on profit taking on Tuesday after
rising to a near seven-month high of $68.68 per barrel the
previous day on hopes for an economic recovery. It continues to
trade a touch above $68. []
The Reuters-Jefferies CRB index <.CRB>, a global commodities
benchmark, marked its biggest one-day gain in two months at 3
percent on Monday.
In another sign of renewed investor interest in gold, the
world's largest gold-backed exchange-traded fund, the SPDR Gold
Trust <GLD>, said its holdings hit a record 1,134.03 tonnes as of
June 1, up 15.27 tonnes or 1.4 percent from the previous business
day. []
The world's largest silver-backed exchange-traded fund, the
iShares Silver Trust <SLV>, said its silver holdings rose 260.36
tonnes from the previous day to a record 8,608.54 tonnes as of
June 1. []
The rally in global stock markets has bolstered the
investment power of funds, spurring buying of gold and silver
ETFs.
"Funds are buying ETFs, as they are increasingly getting more
cash they can use for investment thanks to the gradual recovery
in global stock markets," said Osamu Ikeda, general manager at
Tanaka Kikinzoku Kogyo. []
Japan's benchmark Nikkei average ended up 0.3 percent on
Tuesday as U.S. manufacturing data the previous day reinforced
hopes that demand will stabilise. []
Precious metals prices at 0600 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 975.00 1.05 +0.11 10.78
Spot Silver 15.60 0.01 +0.06 37.81
Spot Platinum 1216.50 8.00 +0.66 30.53
Spot Palladium 238.50 0.50 +0.21 29.27
TOCOM Gold 3029.00 6.00 +0.20 17.72 49200
TOCOM Platinum 3790.00 59.00 +1.58 42.91 20476
TOCOM Silver 481.00 -1.00 -0.21 50.64 445
TOCOM Palladium 754.00 20.00 +2.72 37.09 645
Euro/Dollar 1.4134
Dollar/Yen 96.23
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
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 Chikako Mogi; Editing by Joseph
Radford)
