* Gold drops on expectations dollar to rally on optimism
* Speculative COMEX net longs rise, prompts selling
* Platinum retreats after S. Africa strike not imminent
(Recasts, updates with quotes, closing prices, adds NEW
YORK to dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Aug 10 (Reuters) - Gold futures dropped to
a 10-day low under $950 an ounce on Monday, losing more than 1
percent on technical selling and a resurgent dollar amid
positive economic news.
"Gold traders were thinking the dollar would lose ground by
today and the opposite has happened. It is still relatively
strong," Miguel Perez-Santalla, vice president of sales at
Heraeus Precious Metals Management in New York.
The dollar gained for a third straight day against a basket
of currencies on Monday as investors continued to trade on the
strong U.S. jobs numbers from Friday while awaiting the Federal
Reserve's statement after its policy meeting later this week.
In the last several months, gold has benefited because of
its status as a hedge against a weakening dollar, as investors
turned to risky assets such as stocks and away from safe-haven
U.S. bonds amid growing economic optimism.
However, there are signs that the dollar could rally and
once again focused on the fundamentals, as last Friday's strong
U.S. jobs report sent the dollar rising and gold weaker.
"Good economic news should be negative for gold, and as
long as the dollar keeps strengthening, gold will come off," he
said," said Perez-Santalla.
U.S. December gold futures <GCZ9> settled down $12.60, or
1.3 percent, at $946.90 an ounce on the COMEX division of the
New York Mercantile Exchange.
Spot gold <XAU=> was at $944.50 an ounce at 2:40 p.m. EDT
(1840 GMT), against $953.80 an ounce late in New York on
Friday.
Gold priced in Australian dollars <XAUAUD=R>, meanwhile,
fell to its lowest level since late November, to A$1,122.42 an
ounce. Euro-priced gold <XAUEUR=R> fell 1 percent to 663.84
euros.
At the peak of the economic crisis earlier this year, both
gold and the dollar had moved in the same direction as
investors sought a safe haven in the U.S. currency. However,
that link was broken as the price of bullion rose as a result
of dollar-hedge buying.
In addition, speculative net long positioning on COMEX rose
last week to just below the year high seen in June, analysts
said, leaving the market vulnerable to a correction.
SOFT INVESTMENT DEMAND
Physical demand for gold remained soft, with the world's
largest bullion-backed exchange-traded fund, the SPDR Gold
Trust <GLD>, reporting a 3.97-tonne outflow on Friday.
The fund's gold holdings have declined by more than 40
tonnes in the last four weeks. []
The metal is also taking support from the signing of a new
Central Bank Gold Agreement to limit official sector gold
sales. While a third pact was expected, the cut in the sales
ceiling to 400 tonnes from 500 is lending support to prices,
analysts said. For an analysis click on: []
Among other precious metals, silver <XAG=> was at $14.34 an
ounce against $14.59, tracking gold. Platinum <XPT=> was at
$1,241 an ounce against $1,261.50, while palladium <XPD=> was
at $272, down slightly from its previous finish of $273 an
ounce.
The chief negotiator from South Africa's biggest union said
he did not see an imminent strike at state power firm Eskom,
which has offered an increased 10.5 percent wage rise.
[]
South Africa is the world's biggest platinum miner,
producing around four-fifths of global supply of the metal, and
the second-largest producer of palladium after Russia.
Close Change Pct 2008 YTD
Chg Close Pct Chg
US gold <GCZ9> 946.90 -12.60 -1.3 884.30 7.1
US silver <SIU9> 14.355 -0.313 -2.1 11.295 27.1
US platinum <PLV9> 1250.90 -17.60 -1.4 941.50 32.9
US palladium <PAU9> 276.60 -2.45 -0.9 188.70 46.6
Prices at 2:41 p.m. EDT (1841 GMT)
Gold <XAU=> 944.50 -9.30 -1.0 878.200 7.5
Silver <XAG=> 14.34 -0.25 -1.7 11.30 26.9
Platinum <XPT=> 1241.00 -20.50 -1.6 924.50 34.2
Palladium <XPD=> 272.00 -1.00 -0.4 184.50 47.4
Gold Fix <XAUFIX=> 945.00 -11.00 -1.2 836.50 13.0
Silver Fix <XAGFIX=> 14.470 -0.180 -1.2 14.760 -2.0
Platinum Fix <XPTFIX=> 1242.00 0.00 0.0 1529.00 -18.8
Palladium Fix <XPDFIX=> 272.00 0.00 0.0 365.00 -25.5
(Additional reporting by Martina Fuchs in London)
