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Gold hovers near $900 as investors trim holdings

Gold stayed near a three-week low yesterday after the dollar bounced against the euro, prompting investors to liquidate some holdings in the precious metal.

  • Reuters
  • Published: 00:45 April 25, 2008
  • Gulf News

London: Gold stayed near a three-week low yesterday after the dollar bounced against the euro, prompting investors to liquidate some holdings in the precious metal.

Spot bullion was quoted at $901.50/$902.20 per ounce at 1031 GMT, down from $905.50/$906.70 an ounce late in New York on Wednesday, when it hit an intraday trough of $897.10, its lowest since April 3.

While the long-term outlook for gold remained bullish given record high oil prices and expectations of further interest rate cuts in the US, attempts to revisit a lifetime high of $1,030.80 hit on March 17 have been met by profit-taking.

"This morning gold is taking its cue from the Ifo via the dollar move, and this afternoon it will be looking at US durable goods and new home sales," Barclays Capital analyst Suki Cooper said.

Data that boosts the dollar is generally bad news for gold. "US durable goods might disappoint consensus expectations, which would be supportive for gold," Dresdner Kleinwort said in a report.

Durable goods data for March was due at 1230 GMT, with home sales to follow at 1400.

The Federal Reserve's next policy meeting is due on April 29-30 and investors believe it will cut its benchmark overnight rate by a further quarter percentage point, to 2 percent. Lower rates boost gold's appeal as an alternative investment.

Driven largely by investor buying, gold has gained eight per cent since the start of the year.

In the physical market, jewellers took advantage of the drop in prices to stock up, with main consumer India abuzz with activity during the wedding season.

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