RTRSPRECIOUS-Gold steady after Italy downgrade; firm dollar weighs
* Standard & Poor's downgraded Italy sovereign credit rating
* Spot gold neutral in $1,761.94-$1,805 range - technicals
* Coming up: U.S. Federal Open Market Committee meeting
starts
(Adds comment, details; updates prices)
By Rujun Shen
SINGAPORE, Sept 20 (Reuters) - Gold held steady on Tuesday,
after Standard and Poor's downgrade of Italy's credit rating,
while a stronger dollar weighed on sentiment ahead of a key U.S.
Federal Reserve policy meeting.
In the latest blow to the euro zone, ratings agency Standard
& Poor's cut Italy's sovereign credit rating by one notch,
saying its economic growth prospects were getting weaker and
planned reforms by the government would not help much.
The euro lost about half a percent versus the dollar,
nearing a seven-month low against the greenback, also pressured
by news that two Chinese state banks had stopped trading
currency swaps with some European lenders.
"Ahead of the Fed meeting and G20, after S&P and Bank of
China news, people just want to be as safe as they can, and
dollar is probably the safest bet in the near term," said Nick
Trevethan, Senior Commodities Strategist at ANZ.
The dollar's advantage lies in its sufficient pool of
liquidity, he added.
The wild swings in gold prices in the past few weeks have
also upset some gold investors.
Bank of China , a big market-maker in China's
onshore foreign exchange market, has stopped foreign exchange
forwards and swaps trading with several European banks due to
the unfolding debt crisis in Europe, causing some distress in
market sentiment.
Spot gold was little changed at $1,778.30 an ounce by
0641 GMT, down from an intra-day high of $1,786.15. It fell to
as low as $1,768.89.
U.S. gold GCcv1 edged up 0.1 percent to $1,780.80.
Investors are eager to learn if the U.S. central bank will
embark on more stimulus measures to spur economic growth, as
policy makers meet on Tuesday and Wednesday. Another round of
quantitative easing would likely buoy gold, as the prospect of
cheap cash increases inflation outlook.
Technical analysis suggested gold is likely to range between
$1,761.94 and $1,805 in the day, said Reuters market analyst
Wang Tao.
Spot gold has lost more than 2 percent so far this month and
7 percent from the record high of above $1,920 hit on Sept. 6,
but it is still up more than a quarter from the end of 2010.
The prices around $1,700 to $1,750 are seen as a strong
support for gold prices, traders and analysts said.
"It is not easy for gold to break below $1,700," said a
dealer at a large Tokyo-based bullion house. "People are still
watching for good prices for bargain hunting, because it is very
difficult to find alternative assets to buy."
Gold demand in China, the world's largest gold producer and
second-biggest consumer, could rise 10 percent this year as
consumers choose the metal as a form of wealth protection, the
World Gold Council said on Monday.
Spot silver lost 0.8 percent to $39.38, but off the
three-week low of $38.95 hit in the previous session.
Precious metals prices 0641 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1778.30 -0.43 -0.02 25.28
Spot Silver 39.38 -0.31 -0.78 27.61
Spot Platinum 1767.99 -2.79 -0.16 0.03
Spot Palladium 714.00 2.02 +0.28 -10.69
TOCOM Gold 4377.00 -5.00 -0.11 17.38 65969
TOCOM Platinum 4390.00 -42.00 -0.95 -6.52 10719
TOCOM Silver 96.10 -1.80 -1.84 18.64 1218
TOCOM Palladium 1773.00 -25.00 -1.39 -15.45 366
COMEX GOLD DEC1 1780.80 1.90 +0.11 25.28 21207
COMEX SILVER DEC1 39.49 0.32 +0.82 27.62 2672
Euro/Dollar 1.3615
Dollar/Yen 76.51
TOCOM prices in yen per gram. Spot prices in $ per ounce.
COMEX gold and silver contracts show the most active months
