* Pressured by Bernanke's comments on receded inflation
* Gold ETF GLD holds at record, iShares Silver rises
* South African gold production falls 13.6 pct in 2008
(Recasts, updates with quotes, closing prices, adds NEW
YORK to dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Feb 24 (Reuters) - Gold ended more than 2
percent lower Tuesday on a combination of options-related
selling and profit taking triggered by comments by U.S. Federal
Reserve Chairman Ben Bernanke that inflation was ebbing.
Buyers took a break after the metal's rally to an 11-month
high above $1,000 an ounce last week, but analysts said the
metal would stay supported by strong investor interest.
The yellow metal accelerated losses after Bernanke said
inflation pressures had receded dramatically as oil and
commodity prices had fallen and slack had built up in the
economy, denting gold's appeal as an inflation hedge.
[]
Spot gold <XAU=> was at $968.20 an ounce at 2:29 p.m. EST
(1929 GMT), down 2.3 percent against its last quote $990.95 in
New York late on Monday.
U.S. gold futures for April delivery <GCJ9> settled down
$25.50, or 2.6 percent, at $969.50 an ounce on the COMEX
division of the New York Mercantile Exchange.
"The banking crisis is continuing, and everyone was hoping
we had seen the bottom as far as equities were concerned," said
Afshin Nabavi, head of trading at MKS Finance in Geneva.
Gold was also pressured as U.S. stocks rallied 4 percent
following Bernanke's comments that signaled nationalization of
major banks was not at hand. []
Gold's failure this week to revisit last week's highs above
$1,000 an ounce has triggered a bout of profit-taking by
short-term investors hoping the precious metal would break
through last March's $1,030.80 record high.
OPTION EXPIRATION
Heavy selling pressure related to COMEX March gold option
expiration on Tuesday, combined with stop-loss orders triggered
by investors who rode on a recent rally weighed down on April
futures, said George Gero, vice president of RBC Capital
Markets Global Futures.
Holdings of the world's largest gold-backed exchange-traded
fund, the SPDR Gold Trust <GLD>, commonly known as GLD, which
held at a record near 1,029 tonnes on Monday.
"We do not believe this is anything to cause acute concern
as we are continuing to see heavy investment demand into
physical gold out of our Swiss sales desks," UBS strategist
John Reade said.
However, Dennis Gartman, independent investor and publisher
of the Gartman Letter, said the fact that holdings of the GLD
saw no new inflows in the last three sessions suggested a tired
gold market.
In supply news, South Africa's Chamber of Mines said the
country's total gold mine production fell 13.6 percent to
220,127 kilograms in 2008, the lowest level in 86 years.
[]
Output had been hit by the impact of the electricity supply
crisis early in the year and lower average grades, it said.
Among other precious metals, spot silver <XAG=> was at
$13.95 an ounce, down 3.2 percent from its Monday finish of
$14.41.
Holdings of the iShares Silver Trust <SLV>, the world's
largest silver-backed ETF, rose 2 percent or 153 tonnes to a
record 8,180 tonnes on Monday. []
Spot platinum <XPT=> was at $1,042.00 an ounce, down 2.7
percent from its previous close of $1,071, while spot palladium
<XPD=> was at $198.50, up 1.5 percent from its late Monday New
York quote of $195.50.
(Additional reporting by Pratima Desai and Michael Taylor;
Editing by Marguerita Choy)
