* Long futures drop, dollar short positions covered
* Dollar may struggle to rise further, gold to be supported
* SPDR Gold ETF holdings unchanged since Dec 21
By Chikako Mogi
TOKYO, Dec 29 (Reuters) - Gold was little changed on Tuesday
in light trading as investors were slow to return from the
holidays, with European and other major metals markets closed
since late last week for Christmas.
With the dollar holding firm against other major currencies,
and long positions in gold futures winding down, traders expected
the market to remain subdued until the new year, when players
return in full force and key data is due for release. U.S. jobs
figures are out in early January.
Expectations for more central banks to start purchasing gold
to stock up their reserves and diversify allocations, along with
views that the dollar will stay pressured due to prospects for
prolonged low U.S. interest rates, will keep support firm for
bullion, analysts said.
There is also an indication that excessive long positions in
gold futures have somewhat been cleared while many dollar short
positions have also been covered, paving the way for gold to test
new highs early in 2010, said Koichiro Kamei, managing director
at financial research firm Market Strategy Institute.
"The dollar's recent firmness was partly due to the covering
of excessive short dollar positions, and that adjustments seem to
be coming to an end," he said.
"Gold's correction may also be over, and talk of central bank
buying will again be the main driver for gold to rally. News of
fresh central bank buying would likely trigger a rally to new
record high prices for bullion," Kamei said.
Spot gold <XAU=> stood at $1,104.85 an ounce as of 0615 GMT,
compared with New York's notional close of $1,105.60. It hit a
record high of $1,226.10 on Dec. 3 but fell to a seven-week low
of $1,074.10 last week due to a sharp rise in the dollar against
the euro.
At current levels, spot gold is set to close the year with
its biggest gain in seven quarters and the largest rise in two
years.
U.S. gold futures for February delivery <GCG0> were down 0.2
percent at $1,105.40 an ounce from $1,107.90 an ounce on the
COMEX division of the New York Mercantile Exchange on Monday.
Futures rose to a record high of $1,227.50 on Dec. 3.
British markets were closed for the Boxing Day holiday on
Monday. Markets in India, the world's biggest gold consumer, and
other Commonwealth countries were also shut.
Many Japanese companies are on New Year's holidays until Jan.
4.
Noncommercial net long U.S. gold futures positions fell 7
percent to 238,076 contracts in the week to Dec. 22 from 256,108
lots, a weekly report by the U.S. Commodity Futures Trading
Commission showed. []
The net long positions were the lowest since the week to Nov.
17, when such positions totalled 235,697 contracts.
The world's largest gold-backed exchange-traded fund, SPDR
Gold Trust <GLD>, said its holdings stood at 1,132.708 tonnes as
of Dec. 28, unchanged since Dec. 21. Holdings hit a record high
of 1,134.03 tonnes on June 1. []
The dollar index, a gauge for the greenback's performance
against six other major currencies, rose 0.1 percent to 77.740
<.DXY>, in sight of a 3-1/2-month high of 78.449 hit last week.
Platinum and palladium rallied last week after news that a
British firm had come a step closer to launching the first U.S.
exchange-traded funds for the precious metals used to clean auto
emissions. []
Precious metals prices at 0615 GMT
Metal Last Change Pct chg Day ago pct Turnover
Spot Gold 1104.50 -1.10 -0.10 25.49
Spot Silver 17.39 -0.11 -0.63 53.62
Spot Platinum 1471.50 -7.50 -0.51 57.89
Spot Palladium 384.50 -3.00 -0.77 108.40
TOCOM Gold 3274.00 -18.00 -0.55 27.24 30664
TOCOM Platinum 4370.00 -2.00 -0.05 64.78 15799
TOCOM Silver 52.20 -0.10 -0.19 -83.65 351
TOCOM Palladium 1143.00 6.00 +0.53 107.82 452
Euro/Dollar 1.4374
Dollar/Yen 91.71
TOCOM prices in yen per gram. Spot prices in $ per ounce.
(Additional reporting by Risa Maeda; Editing by Michael Watson)
