* Strong support seen near $1,074/oz
* Noncommercial futures longs fall 4.3 pct last week
* SPDR Gold holdings remain unchanged []
By Chikako Mogi
TOKYO, Feb 1 (Reuters) - Gold prices retreated to hover near
$1,080 on Monday after posting a third straight week of declines
as investors remained wary of gains in the dollar which weaken
bullion's appeal as a currency hedge.
A U.S. proposal to limit bank risks continued to weigh on
investor sentiment.
The stronger dollar hit commodities across the board, with
the Reuters-Jefferies CRB index <.CRB>, a commodities bellwether
that tracks prices across 19 futures markets, ending January down
about 6 percent. That was its worst loss since November 2008,
when it dropped almost 10 percent. []
A stronger dollar makes commodities denominated in the
currency more expensive for holders of other currencies.
Gold looked vulnerable, but a healthy appetite from physical
buyers was seen likely to keep support solid around $1,074 an
ounce.
"I think physical buying can offset fund selling, with $1,074
offering a very strong support," said Dick Poon, a manager of
precious metals at Heraeus in Hong Kong.
"Physical buying in Asia is strong, with seasonal demand
before the Chinese Lunar New Year," he said, adding that such
demand was expected to keep gold firm in the first quarter.
As expectations for higher interest rates were likely to grow
later in 2010, the dollar's strength could become more prominent
and weigh on gold in the second half of the year, Poon said.
Spot gold <XAU=> was little changed at $1,078.60 per ounce as
of 0242 GMT compared to New York's notional close of $1,079.20.
Spot gold marked a low of $1,073.75 last Thursday, its
weakest since Nov. 3, hit by a stronger dollar and uncertainty
over how President Barack Obama's proposal to limit risk taking
by U.S. banks could impact gold trading.
U.S. gold futures for April delivery <GCJ0> inched down 0.4
percent to $1,079.30, compared to $1,083.80 an ounce on the COMEX
division of NYMEX.
With prices falling, noncommercial net long U.S. gold futures
positions fell 4.3 percent to 211,924 lots in the week to Jan. 26
from 221,469 lots, a weekly report by the U.S. Commodity Futures
Trading Commission showed. []
It was the largest drop since a 7 percent decline in the week
to Dec. 22, and down nearly 20 percent from the peak of 262,331
lots in the week of Nov. 24.
The longs are bailing out, and while physical demand
supports, the market may remain pressured until the long
liquidation runs its course, Yuichi Ikemizu, Tokyo branch manager
for Standard Bank, said in a report.
Net longs in gold futures fell 100 tonnes to 841 tonnes as of
Jan. 26 from previous week's 951 tonnes, the lowest since
September last year, Ikemizu's report said.
Investment into gold has stalled, with holdings at the
world's largest gold-backed exchange-traded fund, SPDR Gold Trust
<GLD>, staying flat at 1,111.922 tonnes as of Jan. 29. []
The dollar was steady on Monday, keeping most gains made the
previous business day when it rose against other major currencies
after stronger-than-expected economic data reinforced the view
that the United States was recovering from recession faster than
other developed countries. []
Precious metals prices at 0244 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 1078.90 -0.30 -0.03 -1.53
Spot Silver 16.14 -0.02 -0.12 -4.10
Spot Platinum 1509.00 9.00 +0.60 2.86
Spot Palladium 414.25 1.25 +0.30 2.16
TOCOM Gold 3135.00 3.00 +0.10 -3.80 42692
TOCOM Platinum 4368.00 28.00 +0.65 -0.30 9985
TOCOM Silver 47.40 0.20 +0.42 -8.32 359
TOCOM Palladium 1199.00 1.00 +0.08 2.92 127
Euro/Dollar 1.3863
Dollar/Yen 90.08
TOCOM prices in yen per gram. Spot prices in $ per ounce.
