* Gold treads water, focus on dollar's direction
* SPDR gold ETF holdings <XAUEXT-NYS-TT> steady
By Miho Yoshikawa
TOKYO, June 17 (Reuters) - Gold was a touch softer on
Wednesday as it edged down towards $930, taking a break from the
previous day's rally, while traders continued to look to the
currency market for direction.
Bullion climbed to a three-month high of $989.80 this month,
but failed to top the key $1,000 level as the dollar rose,
weakening the precious metal's appeal as a currency hedge.
Gold <XAU=> was at $933.0 per ounce at 0234 GMT, down 0.1
percent from New York's notional close of $934.10 on Tuesday, but
off the low of $926.40 struck in New York.
"There's been a little bit of a rebound from its lows but it
certainly seems to be stuck in the doldrums at the moment," said
Darren Heathcote, head of trading at Investec Australia.
Heathcote, who said the dollar remained gold's key driver,
was optimistic about gold's future price prospects.
"I think ultimately, unless we see some kind of negative
fallout again from the financial sector, the hopes are good for a
continued recovery in metal prices and gold to benefit further,"
he said.
Currency market volatility and waning confidence in paper
money has also helped buoy gold as the precious metal is seen as
a hedge against inflation, which erodes the value of paper
assets.
A summit of the so-called BRIC nations -- Brazil, Russia,
India and China -- ended on Tuesday with the participants
demanding a clear say in the global financial system, although
they steered clear of an assault on the dollar's reserve status.
[]
The meeting had attracted the market's interest after a
Russian official said the currency issue would be raised, which
could have had a significant impact on the dollar, a key factor
to move the gold market.
U.S. gold futures for August delivery <GCQ9> were at $933.30
per ounce, up 0.1 percent.
In a mark of sluggish investor interest, the world's largest
gold-backed exchange-traded fund, the SPDR Gold Trust <GLD>, said
its holdings stood at 1,132.15 tonnes as of June 16, unchanged
for an eighth business day. []
Some market watchers say gold seems overvalued, its upside
limited by the near-term risk of deflation.
Economist Nouriel Roubini, who predicted the global financial
crisis, said gold looks overextended as deflation is likely to
outweigh any risks of inflation in the near term. []
"For the next two years deflationary pressure is going to be
dominant, and it is going to become a time bomb down the line if
and when we keep monetising large deficits. It may be too soon to
hedge with gold," he told the Reuters Investment Outlook Summit
in New York.
The euro slipped on Wednesday, losing its grip on gains made
after Russia suggested the need for a reserve currency other than
the dollar, while the yen rose as a dip in investor confidence
prompted a move out of riskier assets. []
PRICES
Precious metals prices at 0232 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 932.80 -1.30 -0.14 5.98
Spot Silver 14.10 -0.07 -0.49 24.56
Spot Platinum 1208.00 -7.00 -0.58 29.61
Spot Palladium 240.00 0.00 +0.00 30.08
TOCOM Gold 2905.00 8.00 +0.28 12.90 26784
TOCOM Platinum 3773.00 -19.00 -0.50 42.27 9114
TOCOM Silver 436.60 -3.90 -0.89 36.74 261
TOCOM Palladium 753.00 -22.00 -2.84 36.91 331
Euro/Dollar 1.3845
Dollar/Yen 96.42
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
(Reporting by Miho Yoshikawa; Editing by Michael Watson)
