(Recasts, updates with closing prices, market activity,
changes dateline to NEW YORK, previous LONDON)
By Frank Tang
NEW YORK, Jan 17 (Reuters) - Gold slipped further away from
record highs after a choppy session on Thursday, extending the
previous session's steep losses and hit by chart-based weakness
and falling energy prices.
The yellow metal could decline further in the near term,
largely due to a possible recovery of the dollar, but losses
should be limited by flight-to-quality demand amid credit
worries and inflation concerns, market watchers said.
"The failure of gold to take out Monday's high at $914 was
seen as a negative by a lot of traders. I just don't see this
market turning around unless there is a news item coming out
that takes people by surprise" said Adam Hewison, president of
INO.com.
Spot gold <XAU=> fell as low as $876.90 an ounce, and was
last quoted at $876.70/877.40 by New York's close at 2:15 p.m.
EST (1915 GMT), against $885.60/886.30 late in New York on
Wednesday, when it dropped 2 percent. It hit a record high of
$914 on Monday.
The most-active gold contract for February delivery at the
COMEX division of the New York Mercantile Exchange <GCG8>
settled down $1.50 at $880.50 an ounce.
"$900 level is going to be a fairly important level for the
market just to digest for the moment. I think we have to get
more consolidation in the market to push it to the $950, $1,000
levels," Hewison said.
Weaker crude oil prices dented gold's appeal as a hedge
against inflation. U.S. crude futures <CLc1> ended 71 cents
lower at $90.13 a barrel on Thursday.
"Given the recent volatility, wide intra-day price swings
seem set to continue," said James Moore, precious metals
analyst at TheBullionDesk.com.
The dollar slipped versus the euro on Thursday after Fed
Chairman Ben Bernanke repeated in a speech to the U.S.
Congress' House Budget Committee that more easing may be
necessary.
Bernanke also said he will support efforts to craft a
fiscal stimulus package and repeated the U.S. central bank was
ready to act aggressively to counter recession risks.
[]
Investors have priced in at least a half-percentage-point
cut in the benchmark U.S. rate this month, with some saying the
Federal Reserve could cut rates by three-quarters of a point.
The Fed is scheduled to render its interest rate decision
at the end of a two-day meeting from Jan. 29 to 30.
CONSOLIDATION SEEN
Zachary Oxman, senior trader with Wisdom Financial in
Newport, California, said gold should consolidate in the near
term, moving in a trading range between $870 and $900.
"Any big corrections here are going to be met with some
long-side accumulation buying," Oxman said.
In research news, consultancy firm GFMS said on Thursday
that the price of gold is expected to correct lower in the near
term, but then surge as high as $1,000 an ounce later this
year, as a weak U.S. dollar and lingering credit turmoil
burnish the metal's investment appeal. []
Meanwhile, industry-sponsored World Gold Council (WGC) said
on Thursday that higher gold prices and increased volatility
hurt the consumption of gold jewelry in India, the world's top
gold buyer, in the fourth quarter of 2007. []
In 2006, India imported about 715 tonnes of gold.
London-based ETF securities expected to more than double
the money managed in its listed exchange traded commodity
funds, including precious metals, to about $7 billion by the
end of 2008. []
In other bullion markets, the key gold futures contract for
December 2008 delivery <0#JAU:> on the Tokyo Commodity Exchange
(TOCOM) ended 26 yen per gram higher at 3,074 yen in a
technical rebound after falling by the daily 120 yen limit on
Wednesday.
In industry news, Highland Gold Mining Ltd <HGM.L> plans to
raise gold output by at least 10 percent this year and is on
track to hit 200,000 ounces of production by 2009, managing
director Henry Horne said. []
Silver <XAG=> rose to $15.86/15.91 an ounce, versus
$15.84/15.89 late Wednesday, supported by news that BHP
Billiton Ltd/Plc <BHP.AX> <BLT.L> had stopped operations at its
Cannington silver mine in Australia after a fatality earlier in
the day. []
Platinum <XPT=> slipped to $1,555/1,560 from $1,559/1,564
an ounce late in New York on Wednesday, while palladium <XPD=>
was down $5 to $366/371 an ounce.
(Additional reporting by Atul Prakash, Daniel Magnowski in
London)
