(Updates to TOCOM close)
By Chikafumi Hodo
TOKYO, Jan 22 (Reuters) - Gold fell to its lowest in nearly
three weeks below $850 an ounce, as euro weakness against the
dollar and sliding energy and global equity prices sparked
heavy profit taking in the metal.
Gold came under pressure as some investors were selling the
precious metal to cover margin calls from hefty losses made on
global stock markets.
Share prices tumbled in Japan, China and India, prompting
investment funds to pull out from gold and other metals,
including Japanese platinum futures <0#JPL:> which fell more
than 2 percent.
But traders expected gold to eventually draw safe-haven
demand on overall financial market uncertainty due to fears of
a U.S. recession.
"When heavy sell-offs in global stocks are happening, it's
tough to buy gold," said Hiroyuki Kikukawa, analyst at IDO
Securities in Tokyo.
"Gold is pressured now as the dollar is firming and stocks
are plunging. In the short term, gold could be weighed down but
the market is still bullish on gold in the long term," he said.
By 0850 GMT, spot gold was trading at $857.65/858.35 an
ounce, down from $864.30/865.00 in late European trade on
Monday.
U.S. markets were closed on Monday for the Martin Luther
King Day holiday.
The spot price fell as far as $849.50 on Tuesday -- the
lowest since Jan. 2. Gold was off about 7 percent from record
highs of $914 per ounce hit last week.
"There are still many market bulls in gold. Funds will flow
into gold once the stock market calms down," said a trader at a
Japanese trading house.
"At the moment, people want to lock in profits from gold
and lower exposures in commodities," he said.
COMEX gold futures slid from Friday's New York settlement.
The most active February contract was down $25.20 or 2.9
percent at $856.50.
U.S. crude <CLc1> dropped more than $4 to its lowest level
since early December on worries that a possible U.S. recession
would slow demand from the world's largest energy consumer.
Japanese precious metals prices fell as the yen reached a
2-1/2-year high against the dollar and falls in Japanese shares
depress triggered sales in gold.
The key December contract on the Tokyo Commodity Exchange
fell as low as 2,911 yen a gram -- the lowest since Dec. 18.
The key contract closed at 2,954 yen, down 53 yen or 1.8
percent from Monday's close.
"Japanese retail players are unwinding positions in TOCOM
gold, possibly to cover losses from the Nikkei," the Japanese
trade house trader said.
Japan's benchmark Nikkei average plunged 5.65 percent to a
28-month closing low on Tuesday, its biggest one-day loss since
the session after the Sept. 11 attacks on the United States in
2001, as growing fears about the U.S. economy sent global
stocks reeling. [].
The Nikkei has lost more than 1,000 points and 9 percent
this week.
The key December TOCOM platinum futures contract <0#JPL:>
fell by its daily 120 yen limit to 5,048 yen a gram on Tuesday.
The limitless frontmonth February contract closed down 163 yen
at 5,144 yen.
The key TOCOM platinum contract was the lowest intraday
level for any benchmark since Dec. 6.
Falls in TOCOM prices dragged down the cash price.
Platinum was at $1,515/1,520 an ounce, down from
$1,537/1,542 in Europe on Monday.
Precious metals prices at 0847 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 857.30 -8.70 -1.00 2.95
Spot Silver 15.49 -0.06 -0.39 4.87
Spot Platinum 1513.00 -23.50 -1.53 -0.46
Spot Palladium 362.00 3.00 +0.84 -1.63
TOCOM Gold 2954.00 -53.00 -1.76 -3.46
164121
TOCOM Platinum 5048.00 -120.00 -2.32 -5.45
48951
TOCOM Silver 531.10 -15.40 -2.82 -1.83
2774
TOCOM Palladium 1249.00 -23.00 -1.81 -7.55
1414
Euro/Dollar 1.4435
Dollar/Yen 106.30
TOCOM prices in yen per gram, except for silver which is in
yen per 10 grams, spot prices in $ per ounce.
(Reporting by Chikafumi Hodo; Editing by Ben Tan)
