BUY OR SELL: Gold revisits $1,000; braces for correction

SINGAPORE (Reuters) - Gold futures powered to $1,000 an ounce for the first time since February on Tuesday as investors sought a safe haven due to uncertainties on the global economic recovery and weakness in the U.S. dollar. Cash gold was a few dollars away from $1,000 and could revisit the February level, although past experience showed such a rally would eventually lead to heavy selling, while gains in stock markets could entice speculators to shift their money back to shares.

But overall sentiment is bullish, with analysts saying the high gold price refected doubts about the health of the global economy as the Group of 20 finance ministers and central bankers said they would not remove economic stimulus.

BEEN HERE BEFORE, AND FAILED Darren Heathcote, head of trading at Investec Australia in Sydney, pointed to the failure of gold to hold above $1,000 for any length of time.

"I would probably look to sell into the rally at $1,000 or above, initially. There's a decent chance there will be some profit taking because of that history," he said.

Spot gold could find support at last week's high around $980, said Heathcote, with resistance at $1,000 and $1,004. Mark Pervan, a senior commodities analyst at ANZ Bank in Melbourne, expected selling around $1,000, which reflected previous chart movements.

"In the past, it's struggled to stay above $1,000 an ounce. It's really a testing time. There's a chance it will go up but it will have to stay above $1,000 for the next two to three days for the longs to repositioned," he said.

"But I think there's a reasonably high chance that the market would want to sell at these levels."

Wakako Harada, senior trader at Mitsubishi Corp in Tokyo, echoed Pervan's comments, saying the gold market was still consolidating.

"Since the price rise was forced by technicals as options were hit and triggered short covering, prices are likely to fall back in the near term. There just isn't a follow-through buying momentum," she said.

"Players see a comfortable range in the latter half of $900: $950-$970, so the market could consolidate around these levels in the near term."

PEOPLE STILL BUYING PHYSICAL

Dick Poon, manager of precious metals at Heraeus in Hong Kong, said recent purchases by jewelers and the industrial sector even at higher gold prices suggested consumers were expecting further rises.

"I am still bullish on gold. There have not been many gold scraps returned to the market in the past two days. Buying on the ETF is also supportive," he said.

The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said holdings stood at 1,077.63 tonnes as of September 7, up 15.8 tonnes since the start of the month.

Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong, said cash gold would breach $1,000 to track futures prices but there could be stiff technical resistance.

"If you are buying at $1,000, what's the target you are looking for. That's the question. Are you looking for $1,200, $1,300, $1,500?" he said.

A dealer at a Japanese trading company in Hong Kong said unless sentiment in gold turned bearish, the metal remained on track to revisit the highs in February.

"Currently gold is facing resistance on the upside but people won't give up trying to push up gold to $1,000," he said.

(Additional reporting by Chikako Mogi in TOKYO; Editing by Michael Urquhart)