* Gold futures end slightly lower, dollar mostly flat
* Rangebound movements possible in shortened trade week
* China says no sudden changes to its currency reserves
(Recasts, updates with quotes, closing prices, changes
dateline, pvs LONDON)
By Frank Tang
NEW YORK, June 29 (Reuters) - Gold futures finished a tad
weaker in quiet, range-bound trade on Monday at the start of a
shortened holiday week, as a unchanged dollar failed to boost
the metal as a hedge against the falling U.S. currency.
Bullion could fall further if the dollar regained its
strength in the near term. Investors view gold as an insurance
against the falling value of their dollar-denominated
portfolio.
"The dollar is definitely a significant factor, which has
been driving gold for a while. If the dollar gets stronger, we
will see weaker gold," said Miguel Perez-Santalla, vice
president of sales of Heraeus Precious Metals Management.
He said that gold would most likely range-bound ahead of
the U.S. Independence Day holiday on Friday. Canadian markets
will also be shut on Wednesday for the Canada Day holiday.
The price of gold largely moved in a broad range between
$920 and $940 per ounce last week, as the combination of the
resurgent dollar and easing inflation worries capped bullion's
gains.
U.S. August futures <GCQ9> settled down 30 cents at $940.70
an ounce at on the COMEX division of the New York Mercantile
Exchange.
Spot gold <XAU=> was at $939.05 at 2:15 p.m. EDT (1815
GMT), compared with $938.05 quoted late in New York on Friday.
Analysts cited selling pressure in gold on Monday after
China said it would maintain a stable foreign exchange policy,
quashing speculation that the country could diversify part of
its reserves into gold.
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.
Bullion investors are looking for trading cues from the
U.S. nonfarm payrolls report scheduled to release on Thursday.
CORRECTION DUE?
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 rise," 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.
In other precious metals markets, spot silver <XAG=> eased
to $13.87 against $14.06 quoted late in New York on Friday,
while platinum <XPT=> dropped to $1,180.50 from $1,196.50, and
palladium <XPD=> rose to $250.50 from its previous finish of
$243.50.
Close Change Pct 2008 YTD
Chg Close Pct Chg
US gold <GCQ9> 940.70 -0.30 0.0 884.30 6.4
US silver <SIU9> 13.975 -0.181 -1.3 11.295 23.7
US platinum <PLV9> 1193.20 -17.50 -1.4 941.50 26.7
US palladium <PAU9> 251.35 4.15 1.7 188.70 33.2
Prices at 2:15 p.m. EDT (1815 GMT)
Gold <XAU=> 939.05 1.00 0.1 878.200 6.9
Silver <XAG=> 13.87 -0.19 -1.4 11.30 22.7
Platinum <XPT=> 1180.50 -16.00 -1.3 924.50 27.7
Palladium <XPD=> 250.50 7.00 2.9 184.50 35.8
Gold Fix <XAUFIX=> 935.50 -6.50 -0.7 836.50 11.8
Silver Fix <XAGFIX=> 14.070 -0.190 -1.3 14.760 -4.7
Platinum Fix <XPTFIX=> 1184.00 0.00 0.0 1529.00 -22.6
Palladium Fix <XPDFIX=> 247.00 0.00 0.0 365.00 -32.3
-------------------------------------------------------------
Prices in dollars per ounce.
2008 close for U.S. gold second contract month, U.S. silver and
palladium third contract months and U.S. platinum fourth
contract month.
(Additional reporting by Nick Vinocur in London and Miho
Yoshikawa in Tokyo; Editing by Marguerita Choy)
