* Bargain-hunting props up gold in Asia
* SPDR Gold holdings <XAUEXT-NYS-TT> fall 0.9 percent
By Risa Maeda
TOKYO, July 9 (Reuters) - Gold edged up on Thursday, after
falling almost $15 towards $900 an ounce the previous day as
investor risk aversion pushed the dollar up versus the euro,
dulling bullion's allure as an alternative asset.
The bounce from a two-month low hit on Wednesday was mainly
led by bargain-hunting by regional dealers, while physical demand
remained low at current high levels, traders said.
Spot gold <XAU=> traded at $911.80 an ounce at 0529 GMT, up
0.4 percent from New York's notional close of $908.45.
U.S. gold futures for August delivery <GCQ9> rose 0.3 percent
to $911.90 an ounce after falling $19.80, or 2.1 percent, to
$909.30 on the COMEX division of the New York Mercantile Exchange
on Wednesday.
"There's bargain-hunter buying in Asia after seeing gold
falling to a six-week low. In the short term, I expect gold to
hold a level between $905 and $914," said Louis Lok, a dealer at
Bank of China in Hong Kong.
Bullion has lost some of its attraction recently due to
lessened inflation concerns after a fall in oil prices and as
flight-to-quality buying in the face of economic uncertainty was
directed into U.S. Treasury bonds and the dollar.
On Wednesday, gold fell as low as $904.70, its lowest since
May 8. Liquidation of long positions by fund managers had
accelerated the decline after gold broke below technical support
at $915, Lok said.
"All the commodities markets faced selling pressure, and
money came out from there into the dollar again," Lok said.
But the dollar pared recent gains on Thursday, with the euro
rising 0.2 percent versus the U.S. currency, helping gold's
recovery.
Still, the dollar was not far from a two-week high versus the
euro hit the previous day when mounting doubts about the health
of the global economy spurred risk aversion. []
Looking ahead, traders said gold may test the downside again
when a technical bounce is over.
"Gold will likely stay under pressure unless investor
confidence comes back over the financial sector and a recovery in
the global economy is more in sight, resulting in a rally in
equities," said a fund manager at a Tokyo-based company.
"I expect gold to test how resilient (support) is and whether
physical demand emerges this summer," the fund manager said,
referring to a key support level of $870-$880.
That level was where the market spent some time after hitting
the year's low of $864 in mid-April and resuming its rebound
towards $1,000.
Bank of China's Lok had a similar view.
"There is a very very important support level at $878 to
$885. In case the market cannot hold above this level, I don't
think it can be lifted above $920 again," Lok said.
Reflecting receding demand for bullion, the holdings of the
world's largest gold-backed exchange-traded fund, the SPDR Gold
Trust <GLD>, fell 0.9 percent on Wednesday.
The holdings stood at 1,109.81 tonnes as of July 8, down
10.38 tonnes from the previous business day and down 24.22 tonnes
from a record hit on June 1. []
Precious metals prices at 0546
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 912.30 3.85 +0.42 3.65
Spot Silver 12.87 0.03 +0.23 13.69
Spot Platinum 1101.50 5.50 +0.50 18.19
Spot Palladium 234.50 3.00 +1.30 27.10
TOCOM Gold 2738.00 -56.00 -2.00 6.41 49708
TOCOM Platinum 3308.00 -46.00 -1.37 24.74 14858
TOCOM Silver 385.30 -6.40 -1.63 20.67 275
TOCOM Palladium 716.00 -7.00 -0.97 30.18 350
Euro/Dollar 1.3913
Dollar/Yen 93.02
(Additional reporting by Chikako Mogi; Editing by Chris
Gallagher)
