(Recasts, updates with market activity, closing prices,
changes dateline from previous LONDON)
By Frank Tang
NEW YORK, Jan 15 (Reuters) - Gold finished slightly lower
in New York on Tuesday, giving back all of its initial gains
after rising toward a record high, as the bullion market took a
breather on signs that the credit market meltdown could take a
toll on global growth.
Patrick Fearon, precious metals analyst with A.G. Edwards &
Sons in St. Louis, said that a sharp bounce in the dollar from
its early lows and falling energy prices triggered profit
taking.
"And I think ultimately you also have to keep in mind that
with the global economy slowing down, at some point, that's
going to be negative for gold. So we should expect to see a
pullback at some point," Fearon said.
Spot gold <XAU=> rose as high as $913.70 an ounce after
falling to a low of $894.10. It was quoted at $899.50/900.20 by
New York's last quote at 2:15 p.m. EST (1915 GMT), against
$902.10/902.80 in New York late on Monday when it hit an
all-time high of $914.
The most-active U.S. gold contract for February delivery at
the COMEX division of the New York Mercantile Exchange <GCG8>
settled down 80 cents at $902.60 an ounce. Earlier, it bottomed
at $891.90 before setting a record high of $916.10 for COMEX
futures on a continual spot-month basis.
The New York February contract has now hit record highs
during each of the last six sessions.
The dollar fell to its lowest against the yen since June
2005 and was initially lower versus the euro after U.S. retail
sales data provided further evidence an economic slowdown was
spreading to the consumer.
However, heavy selling of the U.S. currency against the yen
pushed the euro down by midafternoon.
Gold is often viewed as an alternative to holding the
dollar, and thus the value of gold usually rises when the U.S.
dollar falls.
Jon Nadler, senior analyst with Kitco Bullion Dealers in
Montreal, told clients in a note that the gold market showed
signs of mild profit taking after a technical analysis
indicator signaled that bullion could be overbought.
"While this is not nearly as sharp of a pullback as could
be expected, and another run to the upside is still possible,
but the market is now seriously evaluating the magnitude of the
remaining upside potential...," Nadler said.
In early trade, a combination of strong speculative
interest and flight-to-quality buying amid uncertainties in the
financial market sent gold rising near its record high in spite
of sharply lower energy prices.
"I think gold is breaking waves on its own because of the
increase in speculative activities, technical trading,
investment demand and a declining dollar," said Carlos Sanchez,
associate director, research, with the CPM Group in New York.
Falling crude oil prices also dented the metal's appeal as
a hedge against inflation. U.S. crude futures <CLc1> dropped
$2.30 to close at $91.90 a barrel.
RECORD HIGH ETF
Investors continued to park their money in exchange-traded
funds, backed by physical metals.
Gold held in New York-listed StreetTRACKS Gold Shares
<GLD.P> <XAUEXT-NYS-TT>, the world's largest gold-backed ETF,
rose to a record high of 652.56 tonnes on Monday.
London-based ETF Securities said in a statement its
precious metal ETFs had accumulated over $1.1 billion since
April 2007. In the past six weeks, they added $260 million,
shared equally amongst platinum, silver, gold and a precious
metals basket.
In the physical sector, consumers in India turned their
backs on jewellery shops as gold hit record highs, but others
showed more resilience with dealers noting demand out of China
and other parts of Asia. [] India is the world's
largest consumer of gold.
Platinum <XPT=> rose to $1,568.50/1,5783.50 from
$1,572/1,577 an ounce late in New York on Monday, when it
spiked to a record high of $1,590.50, tracking gold's rally.
"The outlook for the white metal is still extremely
bullish, with the tight fundamental picture limiting price dips
and the white metal should now look to challenge $1600/oz,"
James Moore, precious metals analyst at TheBullionDesk.com said
in a note.
Silver <XAG=> rose to $16.10/16.15 from its previous close
at $16.31/16.36 an ounce, but off Monday's 27-year high of
$16.58. Palladium <XPD=> was $1 down at $378/384 an ounce.
(Additional reporting by Atul Prakash in London, Lewa
Pardomuan in Singapore and Biman Mukherji in New Delhi; Editing
by Christian Wiessner)
