* Initial sell-off sends gold to five-week low below $900
* Banks cut platinum view on better supply, demand balance
* Traders focus on U.S. GDP and payrolls data
(Recasts, updates with quotes, closing prices, market
activity, adds NEW YORK to dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, July 30 (Reuters) - Gold ended more than 1
percent lower on Wednesday, erasing early heavy losses as a
late crude oil rally offset an initial dollar rise and equities
gains.
Gold <XAU=> was at $907.20/908.40 by New York's last quote
at 2:15 p.m. EDT (1815 GMT), down from $918.80/920.30 an ounce
late in New York on Tuesday. Earlier in the session it slipped
as low as $893.50, its weakest level since June 26.
Jonathan Jossen, COMEX floor trader in New York, cited
lessened market jitters and pent-up selling related to crude
oil's recent weakness.
"I guess everything is all right in the financial world
now. All the write-downs are fine. I think we should have been
lower (with crude's recent drop) but we never came off," Jossen
said.
Jossen said that gold's initial sell-off broke below key
chart supports and bullion could test an area between $886 and
$875 an ounce in the near term.
The precious metal weakened in early trade, slipping below
support around $913 an ounce after U.S. economist and trader
Dennis Gartman said he was exiting his gold positions.
Further selling then took the metal to $903 an ounce,
before a sharp strengthening in the dollar after
above-consensus ADP jobs data sent it lower. []
The U.S. Federal Reserve also said it is boosting liquidity
in the financial markets. The Fed said it will extend two
lending facilities through to January, and announced new
coordinated action with the ECB. []
Gold is also suffering from receding inflation fears, which
were a key factor driving the yellow metal to new all-time
highs earlier this year.
"The reality for the gold market is that inflation risks
are leaving the price rapidly, courtesy of the weaker growth
outlook and the fact that central banks are still trying to
sound as hawkish as the underlying growth outlook allows them
to be," said JPMorgan in a note.
However, gold recouped some of its losses as crude oil
staged a rally after U.S. government data showed an unexpected
drop in gasoline stocks, boosting gold's inflation hedge
appeal. U.S. crude futures <CLc1> ended up $4.58 at $126.77 an
ounce.
The most-active U.S. December futures <GCZ8> settled down
$14.10, or 1.5 percent, at $912.30 an ounce on the COMEX
division of New York Mercantile Exchange.
The gold market also lacked buying interest as major
economic data will be available only later this week. The U.S.
GDP data is scheduled on Thursday and payrolls report on
Friday.
PLATINUM LANGUISHES
Platinum prices languished on Wednesday as the market
worried about the outlook for demand and fears over supply
eased. Two banks, Goldman Sachs and Standard Chartered, cut
their platinum price forecasts for 2008 and 2009.
Standard Chartered said it now sees the metal trading at an
average $1,750 an ounce in the fourth quarter of this year and
$1,675 in 2009, against previous forecasts of $2,050 and
$2,105, respectively.
Goldman, meanwhile, said it is cutting its full-year
forecast to $1,907 an ounce from $2,107, and its 2009 forecast
to $1,963 from $2,300, in response to signs of weaker demand.
Spot platinum <XPT=> ended lower at $1,725.50/1,745.50 an
ounce from $1,735.50/1,755.50 late in New York -- far off a
record high of $2,290 hit in March.
Among other precious metals, spot palladium <XPD=> fell to
$371.00/379.00 from its previous finish of $380.00/388.00,
having earlier touched a new 5-1/2 month low of $366.50 an
ounce, tracking platinum.
Silver <XAG=> tumbled to $17.50/17.57 an ounce from
$17.32/17.38 late on Tuesday in New York.
(Editing by Christian Wiessner)
