(Update with quotes, prices)
By Atul Prakash
LONDON, April 24 (Reuters) - Gold slipped nearly 2 percent
to a three-week low below $900 an ounce on Thursday after the
dollar bounced against the euro, prompting bullion investors to
liquidate some holdings.
Spot gold <XAU=> fell as low as $888.60 an ounce and was
quoted at $889.60/890.30 at 1539 GMT, down from $905.50/906.70
late in New York on Wednesday.
"Some funds were pretty long and they used oil and currency
moves to get rid of some long positions. The physical take-off
was also not that big," said Michael Kempinski, senior precious
metals trader at Commerzbank.
"It's a very thin and nervous market at the moment. The
upside technical trend has also been broken and that's why the
selling pressure is still on."
The dollar rose broadly after government data showed
better-than-expected readings on weekly jobless claims and last
month's durable goods, indicating that the U.S. economy may be
stabilizing.
In contrast, demand for the euro slid after a reading on
German business sentiment showed the biggest monthly fall since
September 2001, denting confidence in the euro zone economy.
A firmer dollar makes gold costlier for holders of other
currencies and often lowers bullion demand. The metal is also
generally seen as a hedge against oil-led inflation.
Oil dropped below $116 a barrel as the dollar firmed and
investors booked profits after crude rallied to a record high
earlier this week.
"Gold has broken some important technical levels today. Much
depends on the outcome of the Fed meeting next week and the data
flow from the U.S," said David Thurtell, analyst at BNP Paribas.
"I'm confident that there will be decent support in the high
$800s," he added.
The Federal Reserve's next policy meeting is due on April
29-30 and investors believe it will cut its benchmark overnight
rate by a further quarter percentage point, to 2 percent. Lower
interest rates boost gold's appeal as an alternative investment.
Spot platinum <XPT=> fell as low as $1,962 an ounce and was
last at $1,972/1,987, versus $1,991.50/2,001.50 on Wednesday.
The market came under pressure after Mitsui Mining and
Smelting Co Ltd <5706.T> said it has developed a new catalyst
for diesel engine cars that replaces platinum with much-cheaper
silver. []
But precious metals consultancy GFMS Ltd. said in a report
that platinum may spike to a record high of $2,400 an ounce this
year as the investment climate continues to be positive and
fundamentals remain strong. []
Palladium was likely to trade in a broad trading range of
$400-$550 an ounce in 2008, as demand from autocatalyst and
jewellery makers was seen improving, the report said.
Spot palladium <XPD=> fell to $432.50/440.50 per ounce from
$441.50/447.50, while silver <XAG=> was down at $16.72/16.78 an
ounce, against $17.14/17.20 late on Wednesday.
(Editing by Daniel Magnowski)
