(recasts, adds quotes, changes prices, pvs SINGAPORE)
By Atul Prakash
LONDON, Jan 17 (Reuters) - Gold slipped further away from
record highs on Thursday as the dollar held gains ahead of
testimony by U.S. Federal Reserve Chairman Ben Bernanke.
A firmer oil and physical buying at lower levels limited
declines, but some analysts said the metal might witness further
sell-off in the near term on currency moves.
"At the moment, bullish factors for the dollar and bearish
factors for the euro are winning," Tom Kendall, precious metals
strategist at Mitsubishi Corporation, said.
"The euro has already traded below $1.46 this morning and
the euro-yen is hovering just around 157 yen. If both levels are
broken to the downside, gold will be under renewed pressure and
the current correction could embark on another leg lower."
Spot gold <XAU=> fell as low as $877 an ounce and was quoted
at $881.60/882.30 by 1107 GMT, against $885.60/886.30 late in
New York on Wednesday, when it dropped more than 1 percent. It
hit a record high at $914 on Monday.
The euro <EUR=> slid to 2-week lows versus the dollar and
was last quoted at $1.4615. Against the yen <EURJPY=>, it
hovered around $157 yen.
Some analysts said the dollar would probably struggle due to
expectations for at least a half point interest rate cut by the
Federal Reserve this month to stimulate the sagging economy.
Investors await U.S. housing starts data at 1330 GMT and a
speech by Bernanke at 1500 GMT for direction and clues on how
much the bank is poised to cut rates.
A firmer dollar makes gold costlier for holders of other
currencies and often lowers bullion demand. The metal is also
generally seen as a hedge against oil-led inflation.
Oil edged up, recovering from losses of more than $3 in the
past two days as a hefty rise in U.S. stocks compounded concerns
of a slowing economy in the world's top energy consumer.
"Given the recent volatility, wide intra-day price swings
seem set to continue," said James Moore, precious metals analyst
at TheBullionDesk.com.
"Ultimately the troubles with the U.S. economy, coupled with
geopolitical tensions and its recent strong performance will
continue to draw investors towards the market and push gold to
higher levels in the coming sessions," he said in a report.
LONG-TERM OUTLOOK BULLISH
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. []
London-based ETF securities expected to more than double the
money managed in its listed exchange traded commodity funds,
including precious metals, to about $7 billion by the end of
2008. []
In other bullion markets, the key gold futures contract for
December 2008 delivery <0#JAU:> on the Tokyo Commodity Exchange
(TOCOM) ended 26 yen per gram higher at 3,074 yen in a technical
rebound after falling by the daily 120 yen limit on Wednesday.
U.S. gold futures rebounded, with the most active February
contract <GCG8> up $2.0 an ounce at $883.80.
In industry news, Highland Gold Mining Ltd <HGM.L> plans to
raise gold output by at least 10 percent this year and is on
track to hit 200,000 ounces of production by 2009, managing
director Henry Horne said. []
Silver <XAG=> was at $15.82/15.87 an ounce, down 2 cents
from its previous close. The market was supported by news that
BHP Billiton Ltd/Plc <BHP.AX> <BLT.L> had stopped operations at
its Cannington silver mine in Australia after a fatality earlier
in the day. []
Platinum <XPT=> rose to $1,561/1,564 from $1,559/1,564 an
ounce in New York, while palladium <XPD=> was down $2 at
$369/374 an ounce.
(Additional reporting by Lewa Pardomuan in Singapore)
(Reporting by Atul Prakash; editing by Michael Roddy)
