RTRS:PRECIOUS-Gold recovers from 2-1/2 week low; fund outflows cloud sentiment
* Gold recovers after earlier falling 0.3 pct
* SPDR holdings drop by another 3 tonnes
(Updates prices)
By A. Ananthalakshmi
SINGAPORE, April 22 (Reuters) - Gold recovered from early
losses on Tuesday as the dollar gave back some gains, but
sentiment among investors continued to be fragile on further
outflows from bullion-backed funds.
Geopolitical tensions in Ukraine failed to lift gold's
safe-haven appeal, underscoring bearish sentiment in the market.
Spot gold rose 0.1 percent to $1,291.40 an ounce by
0703 GMT, after falling as much as 0.3 percent earlier. The
metal declined to $1,281.40 the day before - its lowest since
April 3.
The dollar index climbed to a fresh two-week high
early on Tuesday but later slipped. A lower greenback makes it
cheaper for holders of other currencies to buy gold.
"There's no doubt that the technical picture in gold looks
very sloppy (in the short term), especially if key support
between $1,277-$1,280 gives way," said INTL FCStone analyst
Edward Meir.
"Recent ETF outflows and questions about end-user Chinese
demand in light of reports that a considerable tonnage of
imports was being siphoned off into financing deals, is also
weighing on prices," he said in a note.
A World Gold Council report last week said up to 1,000
tonnes of gold could be tied up in Chinese financing deals,
indicating a big slice of imports has been used to raise funds
due to tight credit conditions, rather than to meet consumer
demand.
The financing-related buying in the world's top gold
consumer means prices could come under pressure if imports are
hit by a broader crackdown on using commodities for finance.
Asian shares were supported on Tuesday after Wall Street
stocks extended gains into a fifth day.
Meir said gold could still benefit from the Ukraine tensions
if more far-reaching sanctions are introduced.
An international agreement to avert wider conflict in
Ukraine was faltering on Monday, with pro-Moscow separatist
gunmen showing no sign of surrendering government buildings they
have seized.
U.S. and European officials say they will hold Moscow
responsible and impose new economic sanctions if the separatists
do not clear out of government buildings they have occupied
across swathes of eastern Ukraine over the past two weeks.
In news from the investment side, SPDR Gold Trust, the
world's largest gold-backed exchange-traded fund, reported
another drop in holdings on Monday. Holdings fell 3 tonnes to
792.14 tonnes.
Last week alone, outflows from the fund - closely watched
due to the size of its holdings - totalled 9.3 tonnes, erasing
all the gains made in the year.
Traders said persistent outflows from the top ETF could
affect market sentiment and make any gains difficult to hold.
