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Gold eases on firm dollar, platinum plunges

(Reuters)
Filed on May 29, 2008

LONDON - Platinum fell more than 4 percent to a three-week low under $2,000 an ounce on Thursday as gold edged lower on a firmer dollar and weaker oil, which lessened the yellow metal's appeal as an anti-inflation tool.

Spot gold was quoted at $892.10/893.10 an ounce at 1016 GMT, down from $899.65/901.05 in New York late Wednesday.

Platinum hit a three-week low of $1,974 and was last quoted at $1,985.50/2,005.50, versus $2,059/2,079 late in New York.

"Platinum has done really well over the last six months but the dollar's strength could be leading to some profit taking," said BNP Paribas analyst David Thurtell, adding that sell-stops were likely to be triggered below the $2,000 an ounce mark.

Gold held below $900 an ounce on continuing dollar firmness.

"The dollar is substantially stronger and that has had an impact on the price this morning," said David Holmes, director of precious metals sales at Dresdner Kleinwort.

A further rise in oil prices could support the market, but bullion investors were cautious in trading gold on the back of oil, which had been volatile recently, Holmes said.

The dollar rose against a basket of major currencies following Wednesday's U.S. durable goods data which came in less weak than expected, giving some respite to investors worried about U.S. economic health.

A firmer dollar makes gold costlier for holders of other currencies and often lowers bullion demand. The metal is also generally seen as a hedge against oil-led inflation.

Oil fell to around $130 on signs that a demand slowdown in some markets may spread as major Asian consumers review their fuel subsidy policies.

US data awaited

Investors will be looking for a clearer picture on the health of the U.S. economy in Thursday's revised U.S. first quarter GDP figures and jobless claims data.

"Traders are likely to closely monitor today's GDP reading, with signs of improved growth potentially triggering a deeper correction back towards $850, while a contraction in growth should enable gold to form a base above $900," James Moore, analyst with TheBullionDesk.com, said in a market note.

Gold's advance earlier this month to last week's peak above $935 an ounce on the back of record oil prices blunted physical demand for the metal. But demand should heat up again if prices stay under $900, which has been a psychological support level.

"Physical demand for gold is definitely returning to the market, certainly sub-$900, and that interest just grows as we approach $850," Holmes said.

Gold futures for June delivery on the COMEX division of the New York Mercantile Exchange were down $6.40 an ounce at $894.10 an ounce.

Spot silver slipped to $17.27/17.33 an ounce from $17.37/17.43, while palladium fell to $427.50/435.50 from $432/$440.


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