(Recasts, updates with quotes, closing prices, market
activity, adds NEW YORK to dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, June 3 (Reuters) - Gold ended lower on
Tuesday after slipping nearly 2 percent 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 at
$882.90/884.10 an ounce by New York's last quote at 2:15 p.m.
EDT (1815 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 that 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.
"Clearly, Bernanke was the catalyst for the move lower (for
gold and commodities) today," said Bruce Dunn, vice president
of trading at Auramet Trading in Fort Lee, New Jersey.
"All the central bank leaders around the world have been
very concerned about inflation. It's been a tremendous
spotlight on commodity prices in general as an inflation
barometer," Dunn said
Meanwhile, U.S. crude futures <CLc1> ended more than $3
below $125 a barrel.
GOLD OPTIONS LAUNCHED
New options contracts based on the SPDR Gold Trust
<GLD.P><GLD.A>, the world's biggest bullion
exchange-traded fund (ETF), began trading Tuesday after
receiving approval from U.S. regulators SEC and CFTC, marking
the first U.S. option offering for a gold ETF. []
George Gero, vice president of RBC Capital Markets Global
Futures in New York, said that the new options would enhance
liquidity and arbitrage opportunities with gold futures.
Meanwhile, 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 $1,992.50/2,012.50 from
$2,000/2,020 an ounce late in New York on Monday, 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 that 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 its
Monday close of $431/439, while silver <XAG=> fell to
$16.75/16.81 an ounce from $16.81/16.87 late in New York on
Monday.
(Additional reporting by Atul Prakash in London)
