* Gold dented as dollar rises broadly, charts bearish
* Market eyes Fed meeting, growth concerns
* SPDR gold ETF holdings <XAUEXT-NYS-TT> flat since June 5
By Veronica Brown and Nick Vinocur
LONDON, June 22 (Reuters) - Gold hit its lowest level since
mid May on Monday, breaking below $920 per ounce as the dollar
lengthened broad gains with investors looking to a Federal
Reserve meeting for clues about U.S. economic health.
Spot gold <XAU=> fell 1.4 percent to $920.80, having earlier
hit a one-month low at $917.90. That compared with $933.80
quoted late on Friday in New York. The price was fixed
or set in London on Monday afternoon at $919.25.
The dollar gained at the expense of higher-yielders <.DXY>,
normally associated with risk-seeking behaviour, reflecting
investor concern about growth prospects in the euro zone and
jitters ahead of Fed's rate setting meeting, a factor that was
seen supporting gold at the lower levels.
The dollar's influence was reflected in a strong correlation
with the spot gold price of -0.8, also seen as a sign of
increasingly risk-averse behaviour.
"The correlation with the dollar is up sharply in recent
weeks," said Dan Smith, analyst at Standard Chartered. "We think
the dollar is going to weaken and provide support for gold."
"We see the next support level at $917," he added.
The Fed is not expected to adjust monetary policy at its
two-day meeting starting on Tuesday, but investors will keep a
keen eye on its statement for clues on the economic outlook and
progress of its debt buyback programme.
Investors also got bearish signals from the World Bank on
Monday as it cut its 2009 growth forecasts for most economies
and described the global outlook as "unusually uncertain."
[]
In early June, a weakening dollar and increasing demand for
gold-backed funds helped bullion hit a three-month high of
$989.80 an ounce. But the dollar has since pared its losses,
dulling some of gold's allure as an alternative investment.
Tumbling crude prices <CLc1> also helped diminish appetite
for gold as a hedge against oil-induced inflationary concerns.
INVESTMENT TAILS OFF
In other metals, silver followed gold lower <XAG=>, falling
to $13.79 from $14.19 late on Friday in New York. Platinum was
bid at $1,173 per ounce <XPT=>, while palladium stood at $232.5
<XPD=>.
Gold's three-week decline, partly due to selling related to
the unwinding of long positions in U.S. gold futures, has
discouraged fresh buying, traders said.
U.S. gold futures for August delivery <GCQ9> fell 1.6
percent to $920.3 per ounce, down 1.6 percent from Friday's
settlement on the COMEX division of the New York Mercantile
Exchange.
A weekly report by the U.S. Commodity Futures Trading
Commission showed noncommercial net long U.S. gold futures
positions fell 7.5 percent to 175,543 lots in the week to June
16 from 189,674 lots the week before. []
The world's largest gold-backed exchange-traded fund, the
SPDR Gold Trust <GLD>, said its holdings stood at 1,132.15
tonnes as of June 19, unchanged since June 5. []
ETF Securities also said on Monday the amount of gold it
holds to back its Gold Bullion Securities exchange-traded
commodity fell around 45,000 ounces on June 19. []
Investors are still trying to decide if earlier bets on
riskier assets such as stocks have been overdone in light of
persistent global growth concerns.
But the metal's appeal as a refuge from uncertainty was
still seen as staying intact.
"Anyone expecting a rapid v-shaped recovery is in for a bit
of a disappointment," said Simon Weeks, director, precious
metals sales at Scotia Mocatta in London.
(Editing by James Jukwey)
