* Gold hit by dollar strength amid fears over euro zone
* Obama's proposal to limit bank risk pressures bullion
* Platinum group rebounds, ignoring weak demand worry
(Recasts, adds comments, adds closing prices, adds double
byline and dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Jan 28 (Reuters) - Gold fell to a near
three-month low on Thursday, hit by a stronger dollar and
uncertainty over how U.S. President Barack Obama's proposal to
limit risk taking by banks could impact gold trading.
Gold and other commodities have been under pressure since
Obama last Thursday threatened to restrict some bank's most
lucrative, and risky, trading operations, possibly including
commodities.
He renewed his calls for robust Wall Street reform in his
annual State of the Union address on Wednesday.
"Even more than the dollar's strength, there are a lot of
worries about banks and big firm's ability to hold long
positions," said Zachary Oxman, managing director of
California-based TrendMax Futures.
"There is a lot of money tied up in buying gold, and you
are seeing a lot of money come off the table now, as people are
willing to take less risk at this point," he said.
Spot gold <XAU=> hit a low of $1,073.75, the weakest since
Nov. 3. It was at $1,087.20 an ounce at 2:51 p.m. EST (1951
GMT), against $1,087.25 late in New York on Wednesday.
U.S. April futures <GCJ0> settled down 90 cents at
$1,084.80 an ounce on the COMEX division of the NYMEX.
On charts, gold futures held key support at their 100-day
moving average at $1,087 per ounce, but further decline could
lead to a test of the $1,060 area, seen as support where prices
topped out on the way up last October, analysts said.
The euro fell to its lowest level in more than six months
versus the dollar <EUR=> as U.S. data and fears over the
outlook for a number of smaller euro zone economies pressured
higher-yielding currencies. []
Gold prices have declined some 4 percent in the last two
weeks as the dollar rallied, with fears over Greece's fiscal
situation and waning risk appetite lifting the U.S. unit at the
expense of higher-yielding currencies.
"Currencies are clearly guiding the immediate direction of
the precious metals, especially after fresh trouble brewing in
Portugal, Italy, Greece, (and) Spain now, which threatens to
undermine the health of the common currency," said Pradeep
Unni, senior analyst at Richcomm Global Services.
Gold was part of a broad commodities selloff. The
Reuters-Jefferies CRB index <.CRB> tumbled on Wednesday,
hitting seven-week lows as the dollar's advance hurt prices of
commodities.
PLATINUM GROUP RECOVERS
Silver <XAG=> rose to $16.25 versus $16.54.
Platinum and palladium rebounded after hitting their lowest
levels since early January on Wednesday, when sentiment
deteriorated after news that Toyota Motor Corp, the world's
biggest automaker, is to suspend U.S. sales of eight models due
to a safety recall.
Platinum and palladium are exposed to the auto sector,
mainly used in catalytic converters.
Platinum <XPT=> was up at $1,512.50 against $1,502.50,
while palladium <XPD=> was at $419 against $411.50.
A Reuters poll published on Wednesday showed platinum and
palladium are expected to outperform other precious metals this
year, with a new wave of investor demand boosting prices in
anticipation of increased industrial use. []
Close Change Pct 2009 YTD
Chg Close % Chg
US gold <GCJ0> 1084.80 -0.9 -0.1 1096.20 -1.0
US silver <SIH0> 16.212 -0.228 -1.4 16.845 -3.8
US platinum <PLJ0> 1493.90 1.80 0.1 1471.00 1.6
US palladium <PAH0> 413.35 -3.40 -0.8 408.85 1.1
Prices at 3:49 p.m. EST (2049 GMT)
Gold <XAU=> 1086.55 -0.70 -0.1 1096.35 -0.9
Silver <XAG=> 16.23 -0.31 -1.9 16.84 -3.6
Platinum <XPT=> 1509.50 7.00 0.5 1465.50 3.0
Palladium <XPD=> 419.00 7.500 1.8 405.50 3.3
Gold Fix <XAUFIX=> 1088.00 -3.75 -0.3 1104 -1.4
Silver Fix <XAGFIX=> 16.62 -12.00 -0.7 16.99 -2.2
Platinum Fix <XPTFIX=> 1517.00 0.00 0.0 1466 3.5
Palladium Fix<XPDFIX=> 426.00 5.00 1.2 402 6.0
(Reporting by Frank Tang and Jan Harvey)
