(Adds activity in physical sector, RSI)
By Lewa Pardomuan
SINGAPORE, Jan 14 (Reuters) - Gold hit another record high
on Monday before losing some strength, but turmoil in financial
markets and expectations of aggressive U.S. rate cuts may help
the metal touch the psychological level of $900 an ounce soon.
Spot gold <XAU=> hit an all-time high of $898.30 an ounce
before dipping to $893.50/894.30 an ounce, led by selling from
jewellers and speculators who cashed in on gains. Gold was last
quoted at $895.70/896.50 in New York on Friday.
"Of course there's no buying from the physical sector. They
are busy selling," said Ronald Leung, director of Lee Cheong
Gold Dealers in Hong Kong.
"(Gold) has a chance to break $900 this week. I think we
can see support at $870-$880. After $900, it will be $910."
COMEX gold futures touched $900.60 an ounce, surpassing
Friday's record high of $900.10. The most active February
contract <GCG8> was later quoted at $896.1, down $1.6 an ounce.
Japanese gold futures <O#JAU:> were closed for a holiday.
Investors have bought gold as a safe-haven asset after the
dollar dropped on expectations the Federal Reserve would cut
interest rates by an aggressive half-percentage point at its
Jan. 29-30 policy meeting to rescue the U.S. economy.
Fears of further subprime mortgage-related write-downs in
the U.S. financial sector and inflation fears driven by
record-high crude oil <CLc1> also attracted buying from
investors and speculators.
"There is blue sky ahead of us and there is room for gold
to go higher. We are in an uncharted territory, really," said
Darren Heathcote of Investec Australia in Sydney.
"We have a weaker dollar and that's encouraged people to
buy gold. We are going to be drawn towards $900 and test it and
not break through today yet," he said.
The euro inched up to $1.4806 <EUR=>, back near a five-week
peak of $1.4825 hit earlier in January.The dollar eased to
108.87 yen <JPY=>.
Gold was on track to test $900 but some dealers said the
metal may have trouble staying above that level as high prices
were likely to turn away jewellery makers and other physical
buyers.
"I still think it's not sustainable. The physical sector is
not too enthusiastic to purchase here," said William Kwan, a
dealer at Phillip Futures in Singapore.
"On the speculative side, the small speculators have
already gotten out of their shorts," he added.
Gold's 14-day relative strength indicator (RSI) rose to
85.95 on Friday as gold hit a record, and hovered above 80 on
Monday. The market views an RSI of 30 or less as oversold and
70 or more as overbought.
In Singapore, dealers noted selling from holders who cashed
in on gold's gains as well as limited purchases from jewellers
at lower levels.
Gold mining stocks rallied after U.S. gold futures hit
record highs, with Newcrest Mining <NCM.AX> up 2.05 percent,
Lihir Gold <LGL.AX> up 1 percent and Sino Gold Ltd <SGX.AX>
<1862.HK> rising 6.62 percent.
Platinum <XPT=> was at $1,562/1,567 an ounce, steady from
$1,562/1,566 an ounce in New York -- within sight of Friday's
record high of $1,564 an ounce.
Silver <XAG=> dipped to $16.18/16.23 an ounce from
$16.19/16.24 late in New York. It rallied to its best level in
27 years at $16.29 last week.
Palladium <XPD=> rose to $376/380 an ounce from $375/379.
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Precious metals prices at 0428 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 893.70 -2.10 -0.23 7.33
Spot Silver 16.18 -0.03 -0.19 9.55
Spot Platinum 1562.00 0.00 +0.00 2.76
Spot Palladium 376.00 1.00 +0.27 2.17
Euro/Dollar 1.4807
Dollar/Yen 108.74
(Editing by Michael Urquhart)
