* Firm U.S. dollar against euro weighs on gold
* Investors await results of stress test on U.S. banks
By Lewa Pardomuan
SINGAPORE, May 6 (Reuters) - Gold dipped almost 1 percent
on Wednesday after a firmer U.S. dollar spurred selling, with
investors turning their attention to the results of stress
tests on U.S. banks that could potentially benefit the metal.
The U.S. government stress test results are due on Thursday and
could show about 10 of the 19 largest U.S. banks under review
would need to raise more capital. A source familiar with the
results said Bank of America <BAC.N> was deemed to need an
additional $34 billion in capital. []
[]
Spot gold <XAU=> was quoted at $902.50 ounce, down $0.70
from New York's notional close. Gold rallied to $915.45 on
Tuesday, its highest since April 27, before slipping as the
dollar changed course and rose against the euro.
"If the stress test results are not good and if the banks
need to raise more money, it just means the financial system is
still not out of the woods yet and investors could turn back to
risk aversion again," said a dealer in Singapore.
"When we move back to risk aversion, then the safe havens
should benefit and the riskier assets such as stocks should
retrace," he said.
Gold was around 10 percent below an 11-month high above
$1,000 hit in February as attempts to revisit that level were
met by profit taking, weaker oil and gains in stock markets,
which prompted investors to shift some of their money to
shares.
It hit an intraday low of $894.30 on Wednesday.
"From what I see in the charts and what gold did yesterday,
it doesn't look very good. Gold traded to the highs of $915
then ended lower," said the dealer in Singapore.
"The broader picture still remains on the test results and
the ECB meeting," said the dealer, referring to expectations
the European Central Bank will cut its main policy rate to a
record low on Thursday. U.S. gold futures for June delivery
<GCM9> fell $0.70 an ounce to $903.60 on on the COMEX division
of the New York Mercantile Exchange.
The euro <EUR=> slipped to $1.3260 from a one-month peak of
$1.3437, and was weaker than $1.3324 late in New York on
Tuesday. []
The world's largest gold-backed exchange-traded fund, the
SPDR Gold Trust <GLD>, said holdings stayed at 1,104.45 tonnes
as of May 5, unchanged since April 23. (GOL/SPDR]
The physical gold market was largely deserted after the
metal's volatile trade on Tuesday. Despite the drop, gold was
about 4 percent above a near 3-month low of $864 struck in
mid-April.
"I think people are reluctant to commit to the high price,"
said Ronald Leung, director of Lee Cheong Gold Dealers in Hong
Kong. "The market is thin. It's easy to manipulate the market."
Japanese markets are closed for Golden Week holidays until
Wednesday.
Turkey said its gold imports declined in April to 25.7 kg,
against 40 kg in March. Year-on-year, they were down 97.5
percent from 1,030 kg. []
PRICES
Precious metals prices at 0531 GMT
Metal Last Change Pct chg Day ago pct MA 30
RSI Spot gold $902.50 -$0.70 -0.08% +0.61% $860.10
57
Spot silver $13.41 $0.07 +0.52% +11.94% $11.29
67
Spot plat $1124.50 -$1.00 -0.09% +0.67% $1152.60
47
COMEX gold $903.60 -$0.70 -0.08% +0.16% $899.53
50
Currencies
Euro/dlr $1.326 $0.003 +0.19% +0.06%
Dlr/yen 98.21 1.44 +1.49% +1.09%
(Editing by Michael Urquhart)
