* Gold dented as dollar rises broadly, charts bearish
* Market eyes Fed meeting, growth concerns
* CME CEO says to boost investment in COMEX futures trade
(Recasts, updates prices, market activity; adds second
byline, dateline, previously LONDON)
By Frank Tang and Veronica Brown
NEW YORK/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.
The dollar gained as investors sought a safe haven <.DXY>
amid concern about the euro zone economy and jitters ahead of
Fed's rate setting meeting. The Fed jitters were seen
supporting gold at lower levels.
The dollar's influence was reflected in a strong
correlation with the spot gold price of negative 0.8, also seen
as a sign of increasingly risk-averse behavior.
"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."
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 strengthened, dampening
hedge buying in the gold market.
Spot gold <XAU=> fell 1.3 percent to $922 at 3:25 p.m. EDT
(2025 GMT). Earlier, it hit a one-month low at $917.90, sharply
down from $933.80 quoted late on Friday in New York.
U.S. August futures <GCQ9> settled down $15.20, or 1.6
percent, at $921 an ounce on the COMEX division of the New York
Mercantile Exchange.
A 3.8 percent drop of U.S. crude oil futures <CLc1> to
below $67 per barrel also dented bullion's appeal as an
inflation hedge.
The Fed is not expected to adjust monetary policy at its
two-day meeting starting on Tuesday, but investors will watch
its statement for clues on the economic outlook and progress of
its debt buyback program.
Investors also got bearish signals when the World Bank cut
its 2009 growth forecasts for most economies and described the
global outlook as "unusually uncertain." []
INVESTMENT TAILS OFF
Silver followed gold lower <XAG=>, falling to $13.73 from
$14.19 late on Friday in New York. Platinum was at 1159.50 per
ounce <XPT=>, while palladium stood at 231.50 <XPD=>.
Stronger economic indicators and lower-than-expected
inflation data have prompted investment funds to unwind some
long gold futures positions.
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. []
In trading news, the chief executive of CME Group Inc
<CME.O> told Reuters in an interview that the largest U.S.
commodities exchange plans to boost investments in its COMEX
gold futures trading operations, as the unit has been
under-developed prior to CME's acquisition.
In the mining sector, the U.S. Supreme Court ruled for
silver and gold producer Coeur d'Alene Mines Corp <CDE.N> by
upholding a government permit allowing the company's Alaska
gold mine to deposit rock waste into a lake on federal land.
(Additional reporting by Nick Vinocur in London; Editing by
David Gregorio)
Close Change Pct 2008 YTD
Chg Close Pct Chg
US gold <GCQ9> 921.00 -15.20 -1.6 884.30 4.2
US silver <SIN9> 13.705 -0.495 -3.5 11.295 21.3
US platinum <PLN9> 1169.10 -42.10 -3.5 941.50 24.2
US palladium <PAU9> 233.90 -12.25 -5.0 188.70 24.0
Prices at 3:25 p.m. EDT (1925 GMT)
Gold <XAU=> 922.00 -11.80 -1.3 878.200 5.0
Silver <XAG=> 13.73 -0.46 -3.2 11.30 21.5
Platinum <XPT=> 1159.50 -45.00 -3.7 924.50 25.4
Palladium <XPD=> 231.50 -12.50 -5.1 184.50 25.5
Gold Fix <XAUFIX=> 919.25 -16.00 -1.7 836.50 9.9
Silver Fix <XAGFIX=> 13.830 8.280 149.2 14.760 -6.3
Platinum Fix <XPTFIX=> 1186.00 0.00 0.0 1529.00 -22.4
Palladium Fix <XPDFIX=> 236.00 0.00 0.0 365.00 -35.3
-------------------------------------------------------------
Prices in dollars per ounce.
2008 close for U.S. gold second contract month, U.S. silver and
palladium third contract months and U.S. platinum fourth
contract month.
