(Recasts, updates with quotes, prices)
By Jan Harvey
LONDON, June 3 (Reuters) - Gold slipped nearly 2 percent on
Tuesday as the dollar bounced back on a U.S. Federal Reserve
warning on the currency, and oil prices fell about $2 a barrel.
Fed Chairman Ben Bernanke issued a rare warning on the
inflationary risk posed by a weak dollar but said U.S. interest
rates were well positioned for an economy facing both price
pressures and threats to growth. []
Spot gold <XAU=> fell as low as $875.10 an ounce and was
quoted at $881.30/882.30 at 1426 GMT, versus $891.25/892.65 late
in New York on Monday. Earlier it touched an intraday high of
$897.10 an ounce.
"The underlying fundamentals are still positive, but gold's
upside is capped by this strength in the dollar. Don't expect
gold to move too much out of the trading range we have seen in
the past week," said Daniel Hynes, strategist at Merrill Lynch.
"We have seen pretty strong support around the $870 level
and buying coming back quite strongly by investors and physical
buyers," he said adding the chance of prices falling sharply
below the level was less likely.
A firmer dollar makes gold costlier for holders of other
currencies and often lowers bullion demand. The metal is also
generally seen as a hedge against oil-led inflation.
Oil prices fell more than $2 a barrel to below $126.
"Gold prices are likely to trade in a range-bound fashion
over the forthcoming weeks as physical buying has shown signs of
picking up as prices have dipped," Barclays Capital said in a
daily market report.
"But prices are most likely in need of a new catalyst to
stimulate a sustained move higher."
PHYSICAL MARKET
Data from the Istanbul Gold Exchange showed Turkey's gold
imports reached 19.4 tonnes in May after dropping off sharply in
the two previous months as high prices hit sales.
However, in the first five months of the year, imports are
still well down on the previous year, off 28.8 percent at 52.7
tonnes.
South Africa's Chamber of Mines said the country's gold
output fell 15.6 percent to 52,228 kg in the first quarter of
2008, against the fourth quarter of 2007, due to a power
shortage. []
Platinum <XPT=> fell to $1,987/2,007 from $2,000/2,020 an
ounce, but was seen underpinned by supply concerns, after
Aquarius Platinum said on Monday that a strike at its Everest
mine would cost the producer some 1,300 ounces of metal.
Platinum spiked to a new all-time high earlier this year
amid fears of electricity shortages in South Africa, the world's
largest producer, would cause a major supply shortfall.
Palladium <XPD=> was at $429/437 an ounce, down from
$431/439, while silver <XAG=> fell to $16.71/16.76 an ounce from
$16.81/16.87 late in New York on Monday.
(Additional reporting by Atul Prakash in London)
(Editing by Christopher Johnson, David Evans)
