* Gold slips, approaches $935; ETF holdings ease
* Dollar supported by China reserves comment
* Analysts eye corrective move lower for bullion
(adds quotes, updates prices)
By Nick Vinocur
LONDON, June 29 (Reuters) - Gold dropped towards $935 per
ounce on Monday, losing ground as the dollar found support from
Chinese comments that ruled out sudden changes to their foreign
exchange reserve policy.
Spot gold fell to $935.50 by 1454 GMT <XAU=>, compared with
$938.05 quoted late in New York on Friday. Earlier the market
hit an intraday high of $942.50, but stayed some way off a two
week high of $948.20 hit last Friday.
China, which holds vast reserves of U.S. currency and
Treasuries, said at a meeting of central bankers in Basel,
Switzerland, that it would not make any "sudden changes" to
currency reserves. []
James Moore, gold market analyst at TheBullionDesk.com said
the soothing comments on China's reserve policy, while generally
supportive for the dollar, were not particularly surprising to
gold investors.
"We know they're not going to go out and do anything -- I
think it's just a knee-jerk reaction," he said.
CORRECTION DUE?
U.S. gold futures for August delivery weakened to $936.90
per ounce, down nearly half a percent on the day.
Some analysts said the precious metal could be due for a
slight correction following last week's rally, which pushed the
price of gold to a two-week high.
"I think the best bet for the moment is that we are going
into a correction phase for gold after last week's rises," said
Jesper Dannesboe, an analyst at Societe Generale.
"I think it's fair to say that the whole commodity rally is
running out of steam, and risk is to the downside," he added.
Reflecting concern that gold may have lost some of its
appeal to investors, the world's largest gold-backed
exchange-traded fund, the SPDR Gold Trust, said its holdings
remained at 1,125.74 tonnes as of June 26, when it fell 0.5
percent.
It is currently down 0.7 percent from a record volume of
1,134.03 tonnes, marked on June 1.
Further weakening physical demand, ETF Securities said the
amount of gold it holds to back its Gold Bullion Securities
exchange-traded commodity fund had declined 567 ounces on June
26.
Noncommercial net long U.S. gold futures positions fell 5.3
percent to 166,294 lots in the week to June 23 from 175,543 lots,
a weekly report by the U.S. Commodity Futures Trading Commission
showed.
In other precious metals markets, spot silver eased to
$13.92 <XAG=> quoted late in New York on Friday, while platinum
dropped to $1,183.50 <XPT=> and palladium rose to $247.50
<XPD=>.
(Reporting by Nick Vinocur, additional reporting by Miho
Yoshikawa; Editing by Veronica Brown)
