* Gold hits 6-week low, physical buyers active
* For the technicals in gold, click []
* Coming Up: U.S. ICSC chain stores y/y; 1145 GMT
(Adds quotes)
By Lewa Pardomuan
SINGAPORE, July 7 (Reuters) - Gold dropped to a six-week
low on Wednesday after China said bullion would not become a
major investment home for its foreign exchange reserves, but
physical buying helped cushion the fall.
The State Administration of Foreign Exchange said U.S.
Treasury securities would remain an important market for the
managers of China's official currency reserves, but gold would
not become a major component of the central bank's portfolio.
[]
Gold <XAU=> dropped to $1,186.95 an ounce, its weakest
since May 25, before bouncing to $1,189.60 by 0744 GMT, still
down $1.90 from New York's notional close.
But lower prices were likely to further stimulate buying in
the physical sector, with dealers reporting interest from top
consumer India and other buyers in Asia such as China,
Indonesia, Japan and Thailand. []
"Gold falls because of the news from China, and there's
also selling in Japanese gold futures," said a dealer in Tokyo.
"But we've seen good buying interest from the general public,"
said the dealer, referring to purchases from retail investors.
Bullion has dropped 6 percent since striking a record above
$1,264 an ounce in late June, but turmoil in the financial
markets could offer investors a safe haven.
Gold had struck a lifetime high on worries the euro debt
crisis was spreading and the U.S. economy was slowing.
For a graphic of the 24-hr gold technical outlook, click:
http://graphics.thomsonreuters.com/gfx/WT_20100707092609.jpg
"I wouldn't be surprised to see gold recover above $1,200
an ounce or may be move even higher in the near term," said
David Moore, a commodity strategist at Commonwealth Bank of
Australia in Sydney.
"At the end of the day, I think the uncertainties in the
international economic environment remain significant and they
will be supportive for the gold price in the near term."
U.S. gold futures for August delivery <GCQ0> fell $5.2 to
$1,189.9 an ounce.
The world's largest gold-backed exchange-traded fund, SPDR
Gold Trust <GLD.P>, said its holdings slipped to 1,316.481
tonnes by July 6 from 1,318.915 on July 2. The holdings hit a
record at 1,320.436 tonnes on June 29. []
"At this stage, I wouldn't read too much into that," said
Moore, referring to the decline in ETF holdings. "I don't think
it's inconsistent with what we're just talking about... may be
some profit taking and things like that."
The Nikkei edged down on Wednesday as shares of exporters
that rose the day before gave back some gains, even after Wall
Street's Tuesday rebound that ended a five-day string of
losses. [] []
The physical sector was active in Singapore and Hong Kong,
and steady demand from jewellers and other physical buyers
across Asia led to supply tightness.
"We've been selling gold since last week, but it's
difficult to get hold of materials within a short period," said
another physical dealer in Singapore, who trades gold bars.
"The market may also turn around too quickly. That's why it's
difficult for both customers and sellers," he added.
The euro dipped on Wednesday but was still hovering near a
recent seven-week high, with traders saying it could rise
further in the near term due to doubts about a recovery in the
U.S. economy and positive technical signals. []
Precious metals prices at 0744 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 1189.60 -1.90 -0.16 8.57
Spot Silver 17.65 -0.13 -0.73 4.87
Spot Platinum 1501.00 -11.50 -0.76 2.32
Spot Palladium 428.30 -6.70 -1.54 5.62
TOCOM Gold 0.00-3344.00 -100.00 -100.00
0
TOCOM Platinum 0.00-4232.00 -100.00 -100.00
0
TOCOM Silver 0.00 -50.30 -100.00 -100.00
0
TOCOM Palladium 0.00-1220.00 -100.00 -100.00
0
Euro/Dollar 1.2576
Dollar/Yen 87.13
TOCOM prices in yen per gram. Spot prices in $ per ounce.
(Editing by Himani Sarkar)
(lewa.pardomuan@thomson reuters.com; +65 6870 3834; Reuters
Messaging: lewa.pardomuan.reuters.com@reuters.net))
