(Updates prices)
By Lewa Pardomuan
SINGAPORE, March 19 (Reuters) - Gold fell more than 2
percent on Wednesday after a less than expected 75 basis points
interest rate cut by the U.S. Federal Reserve boosted the
dollar, lifted stock markets and diminished the metal's appeal
as an alternative investment.
Gold <XAU=> hit a low of $980.80 ounce, down from
$1,002.30/1,003.10 an ounce late in New York on Tuesday, when
it tumbled to its lowest in nearly a week at $977.80. It struck
a record at $1,030.80 an ounce on Monday.
Gold has risen more than 23 percent in 2008 on fears of
inflation as crude oil hit records, hopes of further rate cuts
and deepening U.S. financial concerns. Some investors had bet
the Fed could cut by as much as 100 basis points.
But as fears of inflation lingered, dealers said gold would
attract buying from investors because of the metal's role as a
hedge against inflation.
"Whilst bullion prices may have suffered overnight, in the
longer term the increasing threat of inflation will help to
support prices and could drive it back towards its recent
all-time high," said Investec Australia in a daily report.
The dollar dropped against the yen on Wednesday as
investors booked profits a day after the U.S. currency posted
its biggest one-day gain against the yen in a decade after the
Fed rate cut. ID:nT264310]
Lower rates typically reduce the attractiveness of
dollar-denominated securities and curb demand for the dollars
to buy them.Japan's Nikkei share average <.NN25> jumped 2.8
percent to track gains on Wall Street after the interest rate
cut.
"It looks like hedge funds are selling, so the market may
go down further for today and tomorrow. I guess $970 will be
the level which will attract physical buyers," said a dealer in
Singapore, referring to jewellers and retail investors.
"I think $1,025 is the high but it may difficult to touch,
but if gold breaks $996, then it will be good for the bulls.
Technically, the market is bearish for the next six hours," he
said.
Gold futures for April delivery <GCJ8> on the COMEX
division of the New York Mercantile Exchange fell $17.4 an
ounce to $986.9 an ounce, off Monday's record of $1,033.90.
Spot platinum <XPT=> fell to $1,946/1,956 an ounce from
$1,960/1,970 late in New York -- well below an historical high
of $2,290 an ounce hit on March 4.
The most active Tokyo platinum futures <0#JPL:> rose 87 yen
per gram to 6,078 yen in a technical rebound after falling by
the 300 yen daily limit on Tuesday.
Silver <XAG=> edged down to $19.72/19.77 an ounce from
$19.76/19.81 an ounce. Spot palladium <XPD=> fell to $469/474
an ounce from $477/482 an ounce.
Precious metals prices at 0141 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 986.80 5.30 +0.54 18.51
Spot Silver 19.75 0.09 +0.46 33.72
Spot Platinum 1946.00 -14.00 -0.71 28.03
Spot Palladium 476.00 -1.00 -0.21 29.35
TOCOM Gold 3195.00 27.00 +0.85 4.41
27862
TOCOM Platinum 6071.00 80.00 +1.34 13.71
9955
TOCOM Silver 638.70 5.80 +0.92 18.06
438
TOCOM Palladium 1572.00 69.00 +4.59 16.36
4081
Euro/Dollar 1.5658
Dollar/Yen 99.90
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
(Editing by Michael Urquhart)
