* Gold jumps after beating technical resistance below $900
* Strong interest in out-of-money gold options seen
* Investor demand tested as ETF buying stalls
(Recasts, updates with quotes, closing prices, adds NEW YORK to
dateline)
By Frank Tang and Rebekah Curtis
NEW YORK/LONDON, April 23 (Reuters) - Gold rallied to a
three-week high above $900 an ounce on Thursday on a combination of
buying by commodities funds, technical strength and a lower dollar
versus the euro.
A back-and-forth session on Wall Street and ongoing jitters over
the health of the U.S. economy are enhancing the precious metal's
appeal as a haven from risk, while physical demand is picking up in
major consumer India ahead of a key festival, analysts said.
Gold <XAU=> hit a session high of $908.70 an ounce, its firmest
price since April 3, and was at $904.30 an ounce at 2:51 p.m. EDT
(1951 GMT), up 1.7 percent from its late Wednesday quote $889.15 in
New York.
BNP Paribas analyst Michael Widmer said news that U.S. existing
home sales fell to a much lower-than-expected annual rate in March
was a bit disappointing for the equities market. []
"There is still uncertainty. People are asking themselves at
what stage the economy will bottom out," Widmer added. "There is
still safe haven appeal for gold."
Gold climbed on the U.S. housing news, then jumped after
breaking technical resistance just below $900 an ounce.
Meanwhile, Jonathan Jossen, a COMEX gold options floor trader,
said that there was strong interest from banks and commission houses
in out-of-money longer-dated call options.
Jossen said that gold futures could trade sharply higher if they
could breach above the $911 key resistance level.
U.S. gold futures June delivery <GCM9> settled up $14.10, or 1.6
percent, at $906.60 an ounce on the COMEX division of New York
Mercantile Exchange.
INFLOWS TO GOLD ETF SLOW
But gold has held between $870-900 in recent sessions,
struggling to gain traction as buying of gold-backed exchange-traded
funds stalled.
Holdings of the world's largest gold ETF, the SPDR Gold Trust
<GLD>, are at 1,105.98 tonnes, having recently seen their largest
outflows since last autumn. []
"For gold to be really moving on the upside, you've got to see
more money coming into ETFs to justify that, and that has not been
the case for some weeks now," Simon Weeks, director of precious
metals at the Bank of Nova Scotia, said.
Gold-backed exchange-traded funds saw inflows of 456 tonnes in
the first quarter of 2009, against a total 321 tonnes for the whole
of the previous year, the World Gold Council said on Thursday.
[]
A weaker dollar versus the euro also helped to support bullion,
analysts said, as a lower U.S. currency makes gold cheaper for
holders of other currencies. []
Buying from India ahead of the Akshaya Tritya festival on
Monday, an auspicious time for gold buying, is also helping drive
prices higher, analysts said.
Silver <XAG=> was at $12.78 an ounce, up 4.1 percent from its
previous finish of $12.28.
Among other precious metals, platinum <XPT=> was at $1,173.00 an
ounce, up 0.4 percent from its late Wednesday quote of $1,168.50 and
palladium <XPD=> $230.00 an ounce, essentially unchanged from its
previous finish.
Metals consultancy GFMS said in a closely watched report that
platinum group metals will take little support from their supply and
demand fundamentals this year, but could benefit from investment
demand if gold climbs. []
The group said it expects platinum to trade in a range of $900
to $1,375 in 2009, and palladium to stay between $170 and $325.
(With additional reporting by Jan Harvey)
