* Spot, futures hover around $1,000/oz but below highs
* Next few days crucial if $1,000 can be sustained - trader
* Dollar holds key to gold market direction
* SPDR Gold holdings <XAUEXT-NYS-TT> steady
By Chikako Mogi
TOKYO, Sept 9 (Reuters) - Gold prices rose on Wednesday,
hovering just above $1,000 per ounce but below the highs marked
the previous day, as investors sold the dollar to buy riskier
assets such as stocks and commodities.
Gold surged past $1,000 per ounce on Tuesday on pent-up
technical momentum and dollar weakness, but market watchers were
mixed on whether the yellow metal could stay above that level.
Traders said Tuesday's rally was likely a result of massive
stop orders being hit and triggering a wave of short-covering as
well as fund buying, with little sight of physical demand,
exposing the market to the risk of a correction to the downside.
They said the dollar remains the key factor determining the
gold market's direction, and if the U.S. currency continues to be
pressured by investors selling the currency to buy other riskier
assets, bullion could extend gains.
"The next two days will be crucial in seeing if gold prices
can keep $1,000 or not," said Ronald Leung, director of Lee
Cheong Gold Dealers in Hong Kong. "We need to see how the dollar
moves, as people are using the dollar's weakness as an excuse to
buy gold."
As investors grow more optimistic that the worst of the
global economic downturn is over and are now trying to estimate
the timing of a clear recovery, gold is favoured as a place to
park money, he said.
"With central banks pumping money, there's a lot of money
going around and people are looking to see how to make profits
with the money" and seeing gold as one such opportunity, he said.
Spot gold <XAU=> rose as much as 0.8 percent to $1,002.95
before slipping to $1,000.80 per ounce as of 0300 GMT, compared
to New York's notional close of $995.20. Spot gold rose as high
as $1,007.45 per ounce on Tuesday, its highest since March 2008.
U.S. gold futures for December delivery <GCZ9> edged up as
much as 0.5 percent to $1,005 per ounce, compared with $999.80
per ounce on the COMEX division of the New York Mercantile
Exchange. On Tuesday, gold futures rose to $1,009.70, their
highest since February.
Traders said if gold can keep above $1,000 this week it may
pave the way for a test of the record highs hit in March 2008.
"After topping the record highs of last year, then it will
depend on whether funds will keep buying," Leung said.
Barrick Gold <ABX.TO>, the world's top gold miner, said on
Tuesday it will issue $3 billion in stock to eliminate all of its
fixed-price gold hedges and part of its floating hedges.
[]
"In the bear market, (hedging) saved a lot of people, but in
the bull market it just added supply to the market," John Ing,
president of Toronto investment dealer Maison Placements, said of
the move.
Physical demand shows no sign of picking up, however. India's
gold demand was likely to fall more with world prices at $1,000
an ounce, the president of the Bombay Bullion Association said on
Tuesday. []
There were also no new investment inflows into the world's
largest gold-backed exchange-traded fund, the SPDR Gold Trust
<GLD>, which said its holdings stood steady at 1,077.63 tonnes as
of Sept. 8. []
The dollar remained pressured on Wednesday, after sinking the
previous day to its lowest level against the euro this year when
traders sold the U.S. currency amid a rosy global outlook. []
In other metals, silver was at $16.54 <XAG=>, hovering near a
13-month high hit on Tuesday.
PRICES
Precious metals prices at 0300 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 1000.85 5.65 +0.57 13.71
Spot Silver 16.54 0.13 +0.79 46.11
Spot Platinum 1284.00 1.00 +0.08 37.77
Spot Palladium 294.00 0.00 +0.00 59.35
TOCOM Gold 2983.00 -7.00 -0.23 15.93 30270
TOCOM Platinum 3820.00 47.00 +1.25 44.04 9222
TOCOM Silver 491.50 -3.20 -0.65 53.93 312
TOCOM Palladium 878.00 5.00 +0.57 59.64 156
Euro/Dollar 1.4495
Dollar/Yen 92.35
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
(Editing by Michael Watson)
