(Adds RSI, Tokyo shares)
By Lewa Pardomuan
SINGAPORE, Jan 17 (Reuters) - Gold extended losses from a
record high on Thursday, surrendering as much as $8.60 an ounce
as the dollar held on to its gains against the euro ahead of a
testimony by U.S. Federal Reserve Chairman Ben Bernanke.
Spot gold <XAU=> fell to $880.50/881.50 an ounce from
$885.60/886.30 late in New York on Wednesday, when it dropped
more than 1 percent as funds liquidated positions to cover
margin calls from losses in stock markets.
"That's really a reflection of possibly people's
expectations of some weakness in the economy to come as a
result of the U.S. On top of that, some profit taking is taking
some buyers off the table to pay for margin calls," said Darren
Heathcote of Investec Australia in Sydney.
"I think there'll be a little bit of recession, downward
pressure on it. Maybe there won't be so much jewellery demand,
but I think on the whole, the recent move has been reinfluenced
significantly by the need to cover margin calls."
Gold hit a record high at $914 an ounce on Monday on
expectations of a sharp cut in U.S. interest rates and turmoil
in the financial markets triggered by a mortgage-related
crisis.
Tokyo shares <> rose more than 1 percent on Thursday,
bouncing back from two-year lows as a firmer dollar helped ease
exporters' fears about a potential recession in the United
States, the region's top overseas market. []
"I believe there is a very good chance that we'll see gold
recover, providing the stock market, particularly the U.S.
stock market stabilises," said Heathcote of Investec.
He pegged support levels at $875 and $877, with resistance
at $900.
The euro was up at $1.4680 <EUR=> but near a two-week low
of $1.4594 hit on electronic trading platform EBS on Wednesday
after comments from a European Central Bank official fuelled
fears that U.S. economic weakness may be spreading to Europe.
[]
Investors will scrutinise Fed Chairman Bernanke's words
later in the day for clues on how much the U.S. central bank is
poised to cut interest rates later this month.
Many dealers have priced in expectations for at least a
half-percentage-point interest rate cut by the Fed at its next
regular policy meeting on Jan. 29-30 to stimulate the sagging
economy.
"The small specs are still a bit on a short side. Just a
bit. They might be selling at the lower range right now," said
William Kwan at Phillip Futures in Singapore.
"It's a healthy correction. It makes gold cheaper for
investors to purchase. It's now stabilising around the $880
level, which is quite a fair value for long-term investors
seeking safe-haven asset," he said.
Gold's 14-day relative strength indicator (RSI), which
looked overbought at above 70 earlier this week, dropped to
56.121 on Wednesday, but still suggesting the market may be
prone to a correction.
The market views an RSI of 30 or less as oversold and 70 or
more as overbought.
The key gold futures contract for December 2008 delivery
<0#JAU:> on the Tokyo Commodity Exchange (TOCOM) was 8 yen per
gram higher at 3,056 yen in a technical rebound after falling
by the daily 120 yen limit on Wednesday.
COMEX gold futures extended losses, with the most active
February contract <GCG8> falling $0.6 an ounce to $881.4 an
ounce.
Goldman Sachs raised its 2008 gold price forecast to $915
per ounce from $800, factoring in an expected U.S. recession in
the second and third quarters that would lead to a weaker
dollar. []
Platinum <XPT=> fell to $1,551/1,556 an ounce from
$1,559/1,564 an ounce late in New York.
Silver <XAG=> dipped to $15.80/15.85 an ounce from
$15.84/15.89 an ounce. Palladium <XPD=> dropped to $369/374 an
ounce from $371/375.
Precious metals prices at 0338 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 880.25 3.05 +0.35 5.71
Spot Silver 15.80 0.02 +0.13 6.97
Spot Platinum 1551.00 -8.00 -0.51 2.04
Spot Palladium 369.00 -2.00 -0.54 0.27
TOCOM Gold 3056.00 8.00 +0.26 -0.13
43664
TOCOM Platinum 5218.00 -33.00 -0.63 -2.27
16768
TOCOM Silver 548.90 -0.90 -0.16 1.46
555
TOCOM Palladium 1294.00 -8.00 -0.61 -4.22
731
Euro/Dollar 1.4659
Dollar/Yen 107.12
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
(Editing by Ben Tan)
