(Updates with quotes and prices)
By Atul Prakash
LONDON, Feb 25 (Reuters) - Gold fell more than 1 percent on
Monday after a U.S. Treasury official said he was confident the
U.S. Congress would support the sale of some gold stocks of the
International Monetary Fund.
Spot metal <XAU=> fell as low as $933.50 an ounce and was
quoted at $937.00/937.90 at 1555 GMT, against its intra-day high
of $951.90 and Friday's late quote of $943.70/944.50 in New
York. It hit a record high of $953.60 last week.
"The U.S. Treasury is reported to now support the idea of
limited gold sales by the IMF and that's why gold has come off,"
said Tom Kendall, metals strategist at Mitsubishi Corporation.
"It's a somewhat knee-jerk reaction but the market was a bit
toppy anyway and was looking for a reason to correct. Once gold
got to $950, we were expecting to see some profit taking."
David McCormick, U.S. Treasury's undersecretary for
international affairs, said he was confident the U.S. Congress
would support the sale of a limited portion of the IMF's gold
stocks to fill the institution's income gap. []
He said no decision had been taken on whether the sale of
the gold will be conducted on or off the market. Previous sales
between December 1999 and April 2000 were off market.
The IMF is the world's third-largest gold holder, with more
than 3,000 tonnes of bullion reserves.
Michael Kempinski, senior metals trader at Commerzbank, said
gold appeared good on charts and funds might lift the metal to
new highs in the near term.
"But it looks that the first attempt failed as gold traded
up to $952 very quickly, but came off. The main focus is on the
dollar at the moment and we are likely to see some profit
taking," he added.
The dollar rose against the euro after hitting a three-week
low on Friday.
A firmer dollar makes gold costlier for holders of other
currencies and often lowers bullion demand.
PLATINUM SLIPS
Platinum fell after rising towards last week's record high
of $2,192 an ounce. The metal <XPT=> was last at $2,135/2,145
after rising as high as $2,163, against New York's $2,148/2,152
late on Friday.
But analysts remained confident that the metal would set new
highs after a period of consolidation.
"We continue to believe that platinum will trend higher over
the medium term as investors seek safe havens, a hedge against
inflation and protection against a weaker dollar," Dan Smith,
analyst at Standard Chartered Bank, said in a report.
"However, platinum's fundamentals, and in particular
developments in South Africa, are likely to be far more
important drivers over the next few months."
Platinum might average $2,300 an ounce in the second quarter
as underlying structural problems were likely to persist for the
time being, he said.
In January, the world's biggest platinum and major gold
mines were forced to halt for five days as South African power
utility Eskom restricted firms to 90 percent of normal supply,
leading metal producers to forecast declines in output.
"Platinum and palladium have been the world's best performing
commodities in terms of spot price performance so far this year.
This reflects the ongoing power shortages in South Africa, said
Michael Lewis, head of commodities research at Deutsche Bank.
Platinum and palladium prices have jumped more than 40
percent this year.
In industry news, South Africa's Gold Fields <GFIJ.J>
forecast that gold production for the third quarter would fall
between 20 and 25 percent compared with the December quarter due
to the electricity crisis in the country. []
Silver <XAG=> hit a 27-year high of $18.15 an ounce before
falling to $18.02/18.07, versus $17.98/18.03 in New York.
Palladium <XPD=> rose as high as $524 an ounce before falling to
$520/525, versus $498/503 an ounce.
(Reporting by Atul Prakash; editing by Michael Roddy)
