Gold extends losses as oil drops; dollar weak

Australia - SINGAPORE, Aug 25 - Gold fell further on Monday, losing some of its safe-haven appeal as the U.S. dollar rose against other currencies, while a weaker oil also prompted investors to ditch their bullion holdings.
-- Gold fell to $821.05/823.05 an ounce from $827.00/828.60 an ounce late in New York on Friday, when it slipped more than $5 an ounce.

-- Gold futures for December delivery on the COMEX division of the New York Mercantile Exchange lost $6.8 an ounce to $826.70.

-- Sterling hit a two-year low against the dollar on Monday, extending its losses from Friday when data showed Britain's economy unexpectedly stalled in the second quarter, suggesting a recession could be looming.

-- Crude oil prices fell more than 5.4 percent on Friday in the biggest one-day slide since 2004 as dealers turned their focus to rising supply levels and weakening global demand. -- Spot platinum was unchanged at $1,425.50/1,445.50 an ounce.

-- Spot palladium inched down to $283.00/291.00 an ounce from $285.00/293.00 an ounce.

-- Silver eased to $13.26/13.32 an ounce from $13.33/13.41 an ounce late in New York.

-- The most active Tokyo gold contract for June 2009 delivery on the Tokyo Commodity Exchange fell 17 yen per gram to 2,920 yen. Precious metals prices at 0017 GMT Metal Last Change Pct chg YTD pct chg Turnover Spot Gold 819.80 -2.30 -0.28 -1.55 Spot Silver 13.26 -0.06 -0.45 -10.22 Spot Platinum 1425.50 0.00 +0.00 -6.22 Spot Palladium 283.00 0.00 +0.00 -23.10 TOCOM Gold 2919.00 -18.00 -0.61 -4.61 3685 TOCOM Platinum 4987.00 -99.00 -1.95 -6.59 2050 TOCOM Silver 471.20 -11.10 -2.30 -12.90 46 TOCOM Palladium 1017.00 -20.00 -1.93 -24.72 41 Euro/Dollar 1.4740 Dollar/Yen 110.07 TOCOM prices in yen per gram, except TOCOM silver which is priced in yen per 10 grams. Spot prices in $ per ounce. (Reporting by Lewa Pardomuan; Editing by Anshuman Daga)

Gold Prices Fall for a Second Day in London as the Dollar Rises

Aug. 25 -- Gold fell in London for a second day as a rally in the dollar eroded the appeal of the precious metals as an alternative asset. Silver was little changed.

Gold, priced in dollars, often moves in the opposite direction to the U.S. currency. Bullion jumped 4.5 percent last week, the biggest weekly gain in six months, while the dollar index fell 0.5 percent. Oil dropped by more than $6 a barrel on Aug. 22, the most in percentage terms for more than three years.

``Gold is following the movement in oil, which fell sharply in New York last Friday,'' K.C. Wong, trader at Standard Bank Asia Ltd., said by telephone from Singapore today.

Bullion for immediate-delivery fell as much as 0.7 percent to $817.58 an ounce and was at $822.85 at 11:24 a.m. in London. Silver for immediate delivery traded at $13.39 an ounce, up 0.2 percent.

The dollar also rose for a second day against the euro on speculation a drop in oil prices will support the U.S. economy.

The dollar gained to $1.4767 per euro in London from $1.4793 in New York on Aug. 22. The U.S. currency advanced to 109.93 yen from 110.07 yen.

Gold has been supported in the first half by low levels of sales by central banks, Dan Smith, a metals analyst at Standard Chartered Plc in London, said in a report on Aug. 22.

``Latest figures show that in the 10 months to July sales were just 317 tons, which is equivalent to annualized total 380 tons,'' Smith said. ``This is well below the agreed ceiling of 500 tons per year under the Central Bank Gold Agreement and compares to sales of 476 tons in the previous CBGA year.''

Euro May Stall

Gold may rise for a second straight week on speculation the dollar's rally against the euro will stall, boosting the precious metal's appeal as an alternative investment, according to a Bloomberg News survey on Aug. 21 and Aug. 22.

Twenty-two of 28 traders, investors and analysts surveyed from Mumbai to Chicago advised buying gold. Five respondents said to sell and one was neutral.

Gold for December delivery was down 0.7 percent to $828.20 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange in London. Bullion for December delivery on the Shanghai Futures Exchange fell 2.4 percent to 182.17 yuan a gram ($827.26 an ounce).

In Japan, gold for June delivery on the Tokyo Commodity Exchange fell 0.7 percent to at 2,916 yen a gram ($825.08 an ounce).

Gold heads lower on U.S. dollar

SINGAPORE - Gold dropped more than 1 percent on Monday, losing some of its safe-haven appeal as the U.S. dollar strengthened against other currencies, but a steadier oil limited the falls.

Bullion could find support around $800 an ounce, with the help of buying from jewelers ahead of the festive seasons especially in main consumer, India. Dealers also reported tight supply for gold bars in Singapore and Hong Kong.

Gold slipped to $821.90/822.90 an ounce from $827.00/828.60 an ounce late in New York on Friday, but was off nine-month lows of around $773 hit in mid-August.

Earlier on Monday, the metal dipped to $817.05, down 1.2 percent.

"Gold remains relatively resilient against oil's volatile downward move. This may suggest that buying interest is surfacing just above $800," said William Kwan, bullion director at Gold Capital Management in Singapore.

Oil was steady above $115 a barrel, having fallen 5.4 percent on Friday, the biggest one-day drop in percentage terms since December 27, 2004, on easing supply concerns, but tensions between the United States and Russia would lend support.

Demand for gold in India normally picks up ahead of Diwali, the Hindu festival of lights in October, as people buy gold for auspicious reasons. Also, many Hindu marriages are likely to be held between September and November, said dealers.

"I guess the $800-psychological level support will come into play again. I believe physical demand for gold is likely to remain good and perhaps the shortage may support the market a bit," said Adrian Koh, analyst at Phillip Futures in Singapore."If we start moving below $810, we will probably move to $800 very soon and perhaps gold could retest to the $770s again," he said.

New York gold futures lost $7.0 an ounce to $826.50.

The dollar hit a two-year high against sterling after data last week showed Britain's economy was stalling, raising the prospect for monetary easing by the Bank of England.

Spot platinum dropped to $1,402.00/1,422.00 an ounce from $1,425.50/1,445.50 an ounce late in New York but was off an 11-month low around $1,296 hit last week.

"Near-term support for platinum should come in around the $1,350-level, and if we do move below those levels, we could see another bout of selling towards $1,250 to $1,300," said Koh of Phillip Futures.

In industry news, South Africa's Northam Platinum (NHMJ.J: Quote, Profile, Research, Stock Buzz) posted a 12 percent rise in earnings for the year ending in June, on high metal prices, despite weaker output. The miner forecast a rise in output and prices for the current financial year.

Spot palladium was steady from late New York levels at $285.50/293.50 an ounce. Silver fell to $13.31/13.36 an ounce from $13.33/13.41 an ounce late in New York.

Indian rupee weakens as stronger dollar weighs

MUMBAI, Aug 25 (Reuters) - The Indian rupee weakened on Monday as the dollar rose against a host of currencies, with heavy demand for the U.S. unit from local oil refiners adding to the downward pressure.

The partially convertible rupee ended at 43.79/80 per dollar, 0.8 percent weaker than Friday's close of 43.425/435. It hit a 17-month low of 43.87 last week.

The rupee has shed 2.8 percent in August, taking its losses to 10 percent so far in 2008.

"Rupee depreciated due to the dollar's recovery against majors and other Asian currencies. There was also some dollar demand from oil companies and squaring of short speculative dollar positions,"said L. Subramanian, the chief dealer with ICICI Bank.

One-month offshore non-deliverable forward contracts PYNDF were quoting at 43.96/44.03, weaker than the onshore rate.

The British pound hit two-year lows against a broadly stronger dollar on Monday, with stalled UK economic activity seen as another example of growing economic malaise outside the United StatesDealers said dollar demand from oil refiners, the largest buyers of the U.S. currency in the local market weighed on the local unit.

Oil CLc1, India's biggest import, was trading above $115 as some investors saw buying opportunities after prices posted their biggest one-day slide in percentage terms since 2004 in the previous session. See [O/R].

Indian shares posted a modest gain on Monday after an early rally ran out of steam. Foreigners have been net sellers of more than $7 billion of stocks so far this year, a sharp turnaround from 2007 when record net inflows of $17.4 billion pushed the rupee towards 10-year highs.

Oil rises as dollar weakens

Oil prices edged up to nearly $115 a barrel Monday as the U.S. dollar lost some ground against the euro and the Japanese yen, making commodities more attractive to investors.

By afternoon in Europe, light, sweet crude for October delivery was up 38 cents to $114.97 a barrel in electronic trading on the New York Mercantile Exchange. The contract tumbled $6.59 on Friday to settle at $114.59 a barrel.

Analysts said this week — with U.S. markets headed toward the Labor Day holiday next Monday — would likely be characterized by volatile prices and low trading volumes.

"In the process of trading up and down dramatically, last week, it has become clear that only one factor really matters right now," said analysts at U.S. energy consultancy Cameron Hanover. "That's the dollar."

In a daily market report, Cameron Hanover said oil fundamentals and just about every other factor influencing prices seemed to have taken a back seat to the dollar.

It would take something like a direct hit by a hurricane on oil facilities "to unhook oil from the U.S. currency," the report said. "Big-money investors have turned oil into a proxy for the U.S. dollar."

Unresolved tensions between the U.S. and Russia over the conflict in Georgia caused concerns about supplies in the region and continued to lend support to oil prices, as investors speculate whether oil-rich Russia will use supplies to punish the West.

Russia pulled the bulk of its troops and tanks out Friday under a cease-fire agreement, but built up its forces in and around South Ossetia and Abkhazia, another separatist region. They also left other military posts at locations inside Georgia proper.

A U.S. Navy destroyer loaded with humanitarian aid reached Georgia's Black Sea port of Batumi on Sunday, a move that a Russian general suggested would worsen tensions between the former Cold War foes.

A Monday vote by Russian lawmakers unanimously asking President Dmitry Medvedev to recognize the independence of Georgia's two rebel provinces added to the concerns of energy markets.

Despite the conflict, some analysts said energy flows from Russia to the West were safe.

"We continue to see little chance for oil to be used by Russia as a bargaining tool," said Olivier Jakob of Petromatrix in Switzerland. "Oil is the weapon of last resort, not of first resort ... and it would make no sense for Russia to limit exports of crude or products to European countries."

After gaining early in the session, the U.S. dollar lost ground to the euro and the Japanese yen on Monday.

By afternoon in Europe, the euro rose to $1.4792 from $1.4775 late Friday in New York.

The dollar also fell slightly against the Japanese currency, buying 109.64 yen, down from the 110.03 late Friday in New York.

A falling dollar encourages investors to buy crude oil and other commodities as a hedge against inflation and weakness in the U.S. currency.

In other Nymex trading, heating oil futures rose 3.22 cents to $3.1633 a gallon, while gasoline prices gained 1.50 cents to $2.8836 a gallon. Natural gas futures fell 6.7 cents to US$7.776 per 1,000 cubic feet.

In London, October Brent crude was up $1.56 to $115.48 on the ICE Futures exchange