(recasts, adds quotes, changes prices, pvs SINGAPORE)
By Atul Prakash
LONDON, Feb 26 (Reuters) - Gold fell 1.2 percent on Tuesday
as possible sales of a part of more than 3,000 tonnes of gold
held by the International Monetary Fund dampened sentiment.
The United States said on Monday it supported the sale of a
limited portion of the IMF's gold stocks and was confident
Congress would support the move. The U.S. Treasury had earlier
resisted seeking Congressional approval. []
"It is a material development and suggests that it could
actually get through. That's a genuine change because the market
was assuming otherwise," Stephen Briggs, economist at SG
Corporate and Investment Banking, said.
"In itself, it won't be a huge thing but it is definitely
something that the market was not expecting. Gold was already
overdue a correction after this run and this is a good enough
excuse. It has taken steam out of gold for the time being."
Spot gold <XAU=> fell as low as $926.40 an ounce and was
quoted at $931.60/932.40 at 1059 GMT, against $937.80/938.60 in
New York on Monday and off last week's record high of $953.60.
The IMF is the world's third-largest gold holder, with
3,217.3 tonnes of reserves. Any sale of IMF gold might be done
in accordance with a European Central Bank gold accord, which
limits total gold sales to 500 tonnes a year, analysts said.
"Despite the agreement to 'limited' sales, traders are
likely to interpret the news as negative, given the potential
scale of metal that could enter the market," James Moore,
precious metals analyst at TheBullionDesk.com, said.
DIPS ATTRACT BUYERS
The physical market was abuzz with activity as gold's fall
attracted bargain hunters as well as purchases from jewellery
makers, mainly from Indonesia and Vietnam.
Some analysts said the metal has potential to spike again
after consolidating its position. It rose 14 percent this year
on the top of 32 percent gains in 2007.
"Strong buying on dips is likely to be witnessed outweighing
temporary liquidations on such news, which are quite common when
there are sharp price rises," said Pradeep Unni, analyst at
Vision Commodities, referring to IMF gold sales news.
"Gold should trade strong for most of this year, at least
till mid-2008," he said in a market note, adding the dollar was
expected to remain weak in the near- to medium-term..
The dollar fell against the euro after a forecast-beating
German Ifo business sentiment survey dampened the case for
near-term interest rate cuts from the European Central Bank.
A weaker dollar makes gold cheaper for holders of other
currencies and often lifts bullion demand. The metal is also
generally seen as a hedge against oil-led inflation.
Oil fell below $99 a barrel, as higher demand for winter
fuel was balanced by expectations of a build in crude stocks.
In other precious metals, platinum dropped 2 percent to
track falls in gold and as investors booked profit from last
week's record highs. Palladium was below a 6-1/2-year high and
silver off its best level in 27 years.
Spot platinum <XPT=> fell as low as $2,090 an ounce before
rising to $2,115/2,120, against $2,135/2,145 late in New York
and a recent record high of $2,192.
Palladium <XPD=> fell to $514/518 an ounce from $520/525,
while silver <XAG=> dropped to $18.02/18.07 an ounce from
$18.07/18.12 on Monday, when it hit a 27-year peak of $18.15.
(Additional reporting by Lewa Pardomuan in Singapore)
(Reporting by Atul Prakash; editing by Michael Roddy)
