AFC: Gold off 2-mth high on oil, failed US auto deal
By Lewa Pardomuan
SINGAPORE (Reuters) - Gold slipped more than 1 percent on Friday, a day after hitting a 2-month high, as the collapse of a U.S. auto industry bailout pumelled oil prices and triggered technical selling.
U.S. talks to bail out America's top automakers with a $14 billion rescue package collapsed, igniting a sell-off in Asian stock markets and sending the U.S. dollar to a 13-year low against the yen.
Gold was at $808.00 an ounce, down $10.35 from New York's notional close, having hit an intraday high of $822.95 -- not far from a 2-month high of $833.80 on Thursday.
"It's a combination of three factors: oil's slide, the failure of the (auto) bailout and the failure to breach key technical resistance at $830," said analyst Pradeep Unni at Richcomm Global Services, referring to the price fall.
Oil dropped more than $2 as last-ditch talks to bail out the U,S. auto industry failed, raising prospects of a worsening economic slowdown in the world's largest oil consumer.
The decline in oil came as bullion was heading for its biggest weekly percentage gain in almost three months. Gold has gained as much as 22 percent from a 13-month low of around $680 an ounce in October, shrugging off weakness in other commodities as it is seen as a safe-haven in times of turmoil.
Dealers also expected investors to buy gold on dips.
"I think people are still happy to buy gold as a safe-haven. We also heard the funds are short side," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.
The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said its holdings rose 4.28 tonnes to 762.17 tonnes of gold as of Dec 11.
"I think people are watching movements in the dollar. That's all," Leung, referring to a relatively quiet trade in Asia ahead of next week's U.S. Federal Reserve meeting on interest rates.
The euro slipped to $1.3254 against the dollar, but dealers said the U.S. currency could face downward pressure on expectations of a Fed rate cut next week.
Fears of rising energy costs helped propel gold to a record $1,030.80 an ounce in March before it slipped to track weaker oil, and recently due to a sell-off in equities, which forced investors to sell bullion to cover margin calls.
The Nikkei tumbled 5.6 percent on Friday and erased more than half its gains made this week, led lower by automakers such as Toyota Motor Corp.
Investors were closely watching OPEC for any more signals on what some analysts perceive will be a further 1-2 million barrels per day output cut due at the group's meeting next week.
Platinum was trading at $801.50 an ounce, down $24.50 from New York's notional close, but selling was muted. More than 60 percent of platinum use is in autocatalysts to clean vehicle exhaust fumes.
"We've actually seen buying of platinum ingots by Japanese investors because the price has dropped sharply. But in terms of sentiment, there's so much uncertainty in the market," said a dealer in Tokyo.
Platinum has lost more than 60 percent in value since hitting a life high of $2,290 in March.
New York gold futures fell $17.5 an ounce to $809.1 in electronic trade.