* Gold becoming top-heavy as investor buying slows
* Dollar seen in correction phase after sharp sell-off
* SPDR gold ETF holdings <XAUEXT-NYS-TT> ease slightly
By Chikako Mogi
TOKYO, June 8 (Reuters) - Gold prices inched up on Monday as
the dollar weakened, prompting investors to buy bullion back
after it lost 2 percent late last week when optimism about the
economy reduced its safe-haven appeal.
Spot gold <XAU=> earlier fell to its lowest since May 28 at
$951.50 per ounce, but it then headed higher and was up 0.3
percent at $958.35 per ounce as of 0519 GMT, compared with New
York's notional close of $955.30 on Friday.
U.S. gold futures for August delivery <GCQ9> trimmed earlier
losses of about 0.7 percent and were down 0.3 percent at $959.40
an ounce, compared with $962.60 an ounce on the COMEX division of
the New York Mercantile Exchange.
"Gold is becoming a bit top-heavy as investors find fewer
reasons to buy when stocks are rising and the dollar is
rebounding," said Tetsu Emori, a fund manager at Tokyo-based
Astmax Co Ltd.
"Funds including trend-following CTAs were buying gold as the
market was rallying, and if the market becomes top-heavy, they
will start to look for the moment to cut losses," he said.
Bullion came under pressure on Friday as the dollar posted
its largest one-day gain against a basket of currencies in more
than five months after U.S. jobs data raised hopes for an
economic recovery.
Still, rises in the dollar can also benefit gold if they are
prompted by investor risk aversion.
Gold approached the $1,000 threshold last week, bolstered by
talk of systemic risk in the dollar, including worries about
rising inflation due to heavy U.S. government spending and a
ballooning budget deficit.
Gold often benefits as a hedge against falls in the value of
dollar-denominated assets.
Emori said the dollar's recent rise was likely to be a
short-term unwinding of short positions in the greenback and long
positions in other currencies, and that the dollar would likely
resume its weakening trend as risk appetite returns along with
improving sentiment towards the economy.
But if dollar short-covering continues and pushes gold prices
down to the levels where funds had begun buying in the recent
rally, gold could extend its losses as those funds would have to
cut losses, Emori said.
With gold losing its momentum for a test of $1,000,
investment in gold-backed exchange-traded funds also slowed.
The world's largest gold-backed fund, the SPDR Gold Trust
<GLD>, said its holdings totalled 1,132.15 tonnes as of June 5,
down 0.35 tonnes from the previous day. []
U.S. stocks ended mixed on Friday as investors paused to
consider conflicting signals in monthly U.S. jobs data, which
showed employers cut 345,000 jobs in May, far less than
economists had forecast, after cutting 504,000 jobs in April. But
the jobless rate rose to 9.4 percent, the highest since July
1983, from 8.9 percent in April. []
Speculators boosted their holdings of U.S. gold futures, with
noncommercial investors net long on 187,340 contracts of gold
futures in the week to June 2, compared with a net long 177,308
contracts in the week to May 26. []
PRICES
Precious metals prices at 0517 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 958.40 3.10 +0.32 8.89
Spot Silver 15.33 0.10 +0.66 35.42
Spot Platinum 1258.00 -4.00 -0.32 34.98
Spot Palladium 255.50 2.50 +0.99 38.48
TOCOM Gold 3042.00 -12.00 -0.39 18.23 31633
TOCOM Platinum 3995.00 11.00 +0.28 50.64 15964
TOCOM Silver 483.00 -6.30 -1.29 51.27 486
TOCOM Palladium 823.00 30.00 +3.78 49.64 974
Euro/Dollar 1.3985
Dollar/Yen 98.36
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
(Additional reporting by Miho Yoshikawa; Editing by Hugh Lawson)
