* Gold falls to two-week before bouncing on physical demand
* Platinum hits six-month low on demand fears
* Tokyo gold and platinum futures dented by fund selling
(Recasts to add physical sector)
By Lewa Pardomuan
SINGAPORE, July 24 (Reuters) - Gold regained strength on
Thursday after an earlier drop to a two-week low attracted
buying from jewellers, the electronics sector and bargain
hunters, but losses in oil may limit gains.
Platinum also bounced after hitting a six-month low but
sentiment was bearish on fears of falling demand from car
makers, such as General Motors <GM.N> and Toyota Motor Corp
<7203.T>, given a slowing U.S. economy.
Gold <XAU=> fell as low as $916.40 an ounce, its lowest
since July 9, before rebounding to $922.60/923.60 an ounce, up
from $921.35/922.95 late in New York on Wednesday but still
well below a record high of $1,030.80 hit in March.
"There's a little bit of physical buying. I think the
market should retest $910 to see whether or not it can hold,"
said Ronald Leung, director of Lee Cheong Gold Dealers in Hong
Kong.
Dealers in Singapore also reported light physical buying,
while in Japan purchases from the electronics sector helped
offset persistent sales from retail investors.
Oil <CLc1> extended losses and hit a seven-week low of
$123.89 a barrel after data showed a larger-than-expected
increase in domestic U.S. gasoline stocks last week. []
In theory, a weaker oil price reduces gold's appeal as a
hedge against inflation.
"Weaker oil prices, a stronger dollar, both of these are
negative for gold. I just think there's a good possibility that
we might see a continuation of a fall in oil prices," said
Darren Heathcote of Investec Australia in Sydney.
"I've got to say I didn't foresee gold sort of breaking
through the $936 area as easily as it did. But now it's here.
We've got to be targeting $912-$904 or something like that," he
said.
Declines in holdings on SPDR Gold Trust in New York, the
world's biggest gold-backed exchange-traded fund
<XAUEXT-NYS-TT>, to around 673 tonnes this week from a record
above 705 tonnes in mid-July, suggested there was a shift to
equities, said dealers.
Platinum <XPT=> dropped to $1,722.00/1,742.00 an ounce from
$1,744.00/1,764.00 an ounce. It tumbled to $1,702.50 an ounce
on Thursday, its lowest level since late January.
"The next support is $1,684 but if we break this level,
it's a long long way down to the $1,590 regions," said a dealer
in Singapore.
Platinum struck a record at $2,290 in March after an
electricity shortage that disrupted mining in main producer
South Africa triggered speculative buying, but a combination of
profit taking and demand fears erased most of the gains.
Spot palladium <XPD=> fell to $382.00/390.00 an ounce from
$383.00/391.00 late in New York. It hit an intraday low of
$371.50 an ounce, its lowest level since Jan. 25.
Silver <XAG=> edged up to $17.39/17.45 an ounce from
$17.33/17.38 late in New York, off a three-week low of $17.26.
Gold futures for August delivery <GCQ8> on the COMEX
division of the New York Mercantile Exchange added $0.3 to
$923.10 an ounce.
The most active Tokyo gold contract for June 2009 delivery
<0#JPL:> on the Tokyo Commodity Exchange fell 46 yen per gram
to 3,229 yen.
Precious metals prices at 0517 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 922.80 3.05 +0.33 10.82
Spot Silver 17.39 0.06 +0.35 17.74
Spot Platinum 1722.00 -20.00 -1.15 13.29
Spot Palladium 383.00 3.50 +0.92 4.08
TOCOM Gold 3230.00 -45.00 -1.37 5.56
42638
TOCOM Platinum 5945.00 -138.00 -2.27 11.35
30110
TOCOM Silver 609.60 -9.20 -1.49 12.68
946
TOCOM Palladium 1367.00 -21.00 -1.51 1.18
1951
Euro/Dollar 1.5693
Dollar/Yen 107.82
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
(Editing by Ben Tan)
