* Gold rises after last week's drop; sentiment cautious
* Prominent analyst Prechter says gold could fall 40 pct
* US platinum ETF holdings rose 10 pct last Friday
(Recasts, updates comments, closing prices, market
activity, adds NEW YORK to dateline)
By Frank Tang and Michael Taylor
NEW YORK/LONDON, Jan 25 (Reuters) - Gold rose toward $1,100
an ounce on Monday, boosted by a combination of dollar drop,
crude oil gains and renewed physical buying after last week's
sharp losses.
Investor sentiment, however, remained wary ahead of a whole
host of market events including option expirations on the COMEX
division of the New York Mercantile Exchange and first notice
day later this week, the U.S. Federal Reserve's interest rate
decision and the State of the Union address by U.S. President
Barack Obama both on Wednesday.
"We are having new buying coming into the market, but it
looks like there is more downward pressure. It seems that every
time gold bounces a bit, it gets sold," said Jonathan Jossen,
COMEX gold floor trader.
Gold <XAU=> was at $1,096.70 an ounce by 2:28 p.m. EST
(1928 GMT), against $1,091.65 an ounce late on Friday in New
York.
U.S. February gold futures <GCG0> settled up $6 at
$1,095.70 an ounce.
"There is risk (aversion) interest," said Marc Elliott, an
analyst at investment bank Fairfax. "There is probably a level
of support at about $1,100 -- it may dip below but not much
further for the time being."
A slightly weaker dollar helped bullion prices, after a
sharper-than-expected fall in U.S. existing home sales
rekindled concerns about an economic recovery. []
On Friday, gold hit a near five-week low at $1,081.90,
bringing its losses for the week to more than 3 percent, after
U.S. President Barack Obama's proposal to limit financial
risk-taking hit the broader commodities markets.
"The slump of the last week might be considered by some
bargain hunters as being an excessive one," said Eugen
Weinberg, an analyst at Commerzbank.
There are signs that China, the world's largest gold
producer, could move to tighten monetary policy to rein in its
booming economy, denting gold's inflation hedge appeal.
[]
Robert Prechter, president of Elliott Wave International,
said that gold has hit a top and could fall 40 percent from its
peak in a deflationary environment. []
Gold "is over-owned and overvalued and is about to resume a
bear market, if hasn't already," said Prechter, the technical
analyst known for predicting the 1987 stock market crash.
PLATINUM, PALLADIUM ETFS RISE
Palladium prices rose but were some way off last week's
19-month high at $471.75 an ounce, when the recent launch of
U.S. exchange-traded funds fueled investment demand.
Palladium <XPD=> climbed to $440.50 an ounce, versus
$430.50 late in New York on Friday.
Spot platinum <XPT=> was last at $1,544.50 an ounce,
against $1,546.50. It touched $1,654 last week, its highest
since August 2008.
Holdings of ETF Securities' U.S.-based platinum
exchange-traded fund <PPLTiv.P> rose 10 percent on Friday,
while those of its U.S. palladium product <PALLiv.P> climbed by
a third, the company said on Monday. []
Among other precious metals, silver <XAG=> prices were at
$17.11 an ounce versus $16.96 an ounce late on Monday.
Prices at 2:28 p.m. EST (1928 GMT)
Last Change Pct 2009 YTD
Chg Close % Chg
US gold <GCG0> 1096.90 7.20 0.7 1096.20 0.1
US silver <SIH0> 17.160 0.228 1.4 16.845 1.9
US platinum <PLJ0> 1546.80 2.30 0.2 1471 5.2
US palladium <PAH0> 443.00 2.90 0.7 408.85 8.4
Gold <XAU=> 1097.05 5.40 0.5 1096.35 0.1
Silver <XAG=> 17.11 0.15 0.9 16.84 1.6
Platinum <XPT=> 1540.50 -6.00 -0.4 1465.50 5.1
Palladium <XPD=> 440.00 9.50 2.2 405.50 8.5
Gold Fix <XAUFIX=> 1095.25 -8.25 -0.7 1104 -0.8
Silver Fix <XAGFIX=> 17.16 -12.00 -0.7 16.99 1.0
Platinum Fix <XPTFIX=> 1543.00 0.00 0.0 1466 5.3
Palladium Fix <XPDFIX=> 436.00 2.00 0.5 402 8.5
(Reporting by Frank Tang and Michael Taylor; Editing by
Marguerita Choy)
