* Gold seen more appealing as dollar value questioned
* SPDR gold holdings drop over 1 pct as prices fall
By Chikako Mogi
TOKYO, Dec 9 (Reuters) - Gold edged off three-week lows on
Wednesday to trade around $1,134 as the dollar failed to retain
gains after earlier hitting a one-month high against a basket of
major currencies.
But bullion's rise was also tepid as investors, spooked by
credit woes for Greece and Dubai, looked to reduce risk exposure
and cut positions.
Traders and analysts said while both the dollar and gold are
regarded as safe-haven assets in times of trouble, gold currently
has more appeal due to a weak outlook for the dollar and
expectations for more central banks' purchases of the metal.
"Investors are buying on weakness today, but the outlook
depends on how you expect the U.S. dollar to move in the
medium-term," said Ben Westmore, commodities economist at
National Australia Bank.
"Gold is more appealing because a lot of people are
questioning about the dollar," he said, adding that he expected a
further depreciation in the dollar because of the huge U.S.
budget deficit and low interest rates.
Spot gold <XAU=> rose 0.5 percent to $1,134.40 an ounce as of
0243 GMT, compared with New York's notional close of $1,129.30.
On Tuesday, spot gold fell as low as $1,125.15, the lowest since
Nov. 16. Bullion is off about 7 percent from a record high of
$1,226.10 hit last week.
U.S. gold futures for February delivery <GCG0> declined 0.7
percent to $1,135.50 an ounce from $1,143.40 on NYMEX. Futures
also hit a three-week low of $1,125.30 on Tuesday. Futures are
now about 7 percent below a record high of $1,227.50 touched last
week.
The market remained focused on central banks' interest in
gold. "A lot of banks are looking to diversify funds away from
the dollar," said Westmore.
One downside risk is that current prices may be seen as too
high for new purchases by central banks, with China expressing
such concerns last week.
Gold prices are currently high and markets should be careful
of a potential asset bubble forming, a senior official at China's
central bank said last week, after prices for the precious metal
hit a record high. []
As market prices eased, holdings at the world's largest
gold-backed exchange-traded fund, SPDR Gold Trust <GLD>, fell to
1,116.247 tonnes as of Dec. 8, down 1.2 percent or 13.719 tonnes
from the previous business day.
It was the largest one-day drop in about five months. The
holdings hit a record high of 1,134.03 tonnes on June 1.
[]
The euro recovered against the dollar after hitting a
one-month low earlier in the day, pulling the dollar down against
a basket of six major currencies from a one-month high also hit
earlier. The dollar rose earlier as investors used the excuse of
concerns about rising sovereign debt troubles to unwind leveraged
carry trades ahead of the year end. []
PRICES
Precious metals prices at 0259 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 1135.40 6.10 +0.54 29.00
Spot Silver 17.73 0.14 +0.80 56.63
Spot Platinum 1413.50 3.50 +0.25 51.66
Spot Palladium 367.00 0.00 +0.00 98.92
TOCOM Gold 3237.00 -97.00 -2.91 25.81 83040
TOCOM Platinum 4028.00 -149.00 -3.57 51.89 12148
TOCOM Silver 507.90 -17.80 -3.39 59.07 556
TOCOM Palladium 1053.00 -30.00 -2.77 91.45 393
Euro/Dollar 1.4731
Dollar/Yen 88.40
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
(Editing by Edwina Gibbs)
