* Gold could rise, hold $1,000 if it weathers profit-taking
* SPDR Gold holdings <XAUEXT-NYS-TT> down 0.04 percent
* India's demand slows to trickle, investors cash in
By Miho Yoshikawa
TOKYO, Sept 7 (Reuters) - Gold dipped a touch on Monday but
stayed near the psychological level of $1,000 an ounce on
buying linked to a weaker U.S. dollar and fears about
inflation, which could still spur another rally.
The physical market in Asia saw selling from holders, with
demand from India also slowing to a trickle as jewellers sought
to buy on dips during the festive season in the world's largest
consumer.<GOL/AS>.
Spot gold <XAU=> stood at $993.70 per ounce, down 0.2
percent from New York notional close of $993.40, having rallied
to $997.20 on Thursday -- the highest level since February,
when it topped $1,000.
"The volumes last week that saw it rise were relatively low
... and you might have thought it would be a fragile rise to
these lofty peaks," said Darren Heathcote, head of trading at
Investec Australia.
"The market considers that we could be looking at more
inflation," said Heathcote, adding that there was a chance gold
could climb above the $1,000 level if it manages to weather a
round of profit-taking.
Gold is seen as a hedge against inflation, which erodes the
value of paper assets. The metal has gained on anticipation of
declines in stock markets and inflation fears, with central
banks pumping money into their economies to help fight the
global recession.
"The price is close to $1,000, so you can see there's not
much activity. There's a tug-of-war. Some funds are buying and
some investors are taking profit at the high," said Ronald
Leung, director of Lee Cheong Gold Dealers in Hong Kong.
"If it can't break $1,000 in the next few days, the market
will be a bit tired, and maybe some profit taking will set in.
Of course, you can say everybody is bullish," he said.
Traders said it was a quiet day with New York commodity
markets closed on Monday due to the U.S. Labor Day holiday but
a weaker dollar supported prices.
The dollar and yen lost ground on Monday, while the euro
rose and the Australian dollar hit its strongest level in a
year as shares gained following a G20 pledge to keep economic
supports in place. []
In a sign of possible falling investor interest, the
world's largest gold-backed exchange-traded fund, the SPDR Gold
Trust <GLD>, said its holdings fell 0.38 tonnes to 1,077.63
tonnes on Friday. []
U.S. gold futures for December delivery <GCZ9> were at
$995.40 per ounce at 0730 GMT, after settling down $1 at
$996.70 on Friday, when they hit an intraday peak of $998.40.
Gold was largely unchanged after the U.S. Labor Department
reported on Friday that closely watched nonfarm payrolls for
August showed the smallest decline in a year.
The unemployment rate still jumped to a 26-year high of 9.7
percent. On Saturday, finance ministers and central bankers
from Group of 20 nations pledged to keep emergency support for
their economies in place for now. []
Many market participants thought gold would be hit by
near-term profit-taking after last week's rally, with gold
futures prices climbing by more than 4 percent during the week
to hit a peak of $999.50 on Thursday.
That was the highest level since February, the last time it
topped $1,000.
(Additional reporting by Risa Maeda; Editing by Ben Tan)
