* Profit taking weighs on gold as risk aversion eases
* SPDR gold ETF holdings hit another record high
* Many traders on hold before U.S. May jobs data on Friday
(Recasts, updates prices, comment, changes byline, dateline
previous LONDON)
By Carole Vaporean
NEW YORK, June 2 (Reuters) - Gold slipped on Wednesday as
some investors cashed in on the previous day's two-week high
and as risk aversion dissipated upon release of strong U.S.
housing data that helped spark an equity market rally in a grab
for value among downtrodden shares.
But gold dealings were light and investment demand for the
yellow metal as a haven from credit risk lingers and continues
to underpin prices.
By 2:00 p.m. EDT (1800 GMT), spot gold <XAU=> was bid at
$1,220.05 an ounce, down slightly from $1,224.30 in late
Tuesday business. U.S. gold futures for August delivery <GCQ0>
on the COMEX division of the New York Mercantile Exchange lost
$4.30 to settle at $1,222.60 an ounce.
"We had a dose of profit taking today after some good gains
in gold. Also, I think the (U.S.) housing number was good and
it took some risk out of the market. That led to some further
liquidation in both gold and silver," said James Steel, metals
analyst and senior vice president at HSBC in New York
He added, however, that the session was, "Not especially
active, with people waiting around to see what happens with
(U.S.) payrolls and the credit risk in the euro zone."
Financial and commodity markets were waiting for direction
from insights provided by Friday's release of May U.S. non-farm
payrolls figures.
While some investors unwound precious metals holdings on
Wednesday, they also joined in on the stock market gains.
U.S. stocks rose as investors bought shares beaten down in
the previous session's sell-off and data showed pending home
sales rose more than expected. []
Strong pending U.S. home sales data, which rose 6.0 percent
in April to a six-month high, gave speculators who had bought
gold as a hedge against economic downturn, reason to sell.
[]
The robust U.S. housing news bolstered the dollar for most
of the day, but the euro managed to gain 0.1 percent as the New
York session wound down.
The euro fell early as European Central Bank board member
Christian Noyer was cited as saying the single currency's
exchange rate against the dollar was around a 10-year average
and not at an unusually low level. [] []
"Fundamentals look quite weak, but...investment demand
still looks supportive. Consolidating around these levels looks
likely at the moment, but as long as investment demand looks
strong, we would expect higher highs throughout the year," said
Barclays Capital analyst Suki Cooper.
"We have had some reports that (gold) mine supply is
actually doing quite well, and jewellery demand is looking much
weaker with the import data from India and Turkey out this
week," the analyst added.
CORRELATION
Holdings of the world's largest gold-backed exchange-traded
fund, New York's SPDR Gold Trust <GLD>, rose 0.3 tonnes to a
record 1,268.234 tonnes on Tuesday. []
"Many of the current market conditions for gold closely
resemble those of Q1 2009 -- elevated coin and bar demand,
stellar ETF creations, increased Comex positioning and a
positive correlation with the U.S. dollar index," said UBS
analyst Edel Tully in a note.
The International Monetary Fund confirmed it sold 14.4
tonnes of gold in April, extending its program of planned
bullion sales following the disposal of 5.6 tonnes in February
and 18.5 tonnes in March. []
Iran's state-owned Press TV said the Iranian central bank
would sell 45 billion euros from its foreign exchange reserves
to buy dollars and gold. []
Platinum <XPT=> was barely higher at $1,545.50 an ounce
than $1,545 previously. Palladium <XPD=> slipped to $448 from
$454.50 late Tuesday, amid concern over the demand outlook for
industrial metals.
Platinum group metals traders said they were waiting for
May car sales data from the U.S., China and Europe because of
the metals' use in autocatalyst applications. Strong investment
demand in PGMs earlier this year seems to have hit a plateau.
Spot silver <XAG=> recovered to $18.27 from an earlier
one-week low bid down to $18.06. It remains lower than $18.37
in late Tuesday trade in New York.
(Additional reporting by Jan Harvey; Editing by Marguerita
Choy)
