* Gold off Tuesday high, focus on dollar's direction
* SPDR gold ETF holdings XAUEXT-NYS-TT steady
By Miho Yoshikawa
TOKYO, June 17 (Reuters) - Gold edged up on Wednesday, adding
to the previous day's 0.7 percent rise as the euro extended gains
against the dollar into a second session.
Bullion climbed to a three-month high of $989.80 this month,
but failed to top the key $1,000 level as the dollar rose,
weakening the precious metal's appeal as a currency hedge.
Gold XAU= had risen 0.3 percent to $936.60 an ounce by 0635
GMT from New York's notional close of $934.10 on Tuesday, but was
off the high of $939.25 struck the previous day.
"There's been a little bit of a rebound from its lows but it
certainly seems to be stuck in the doldrums at the moment," said
Darren Heathcote, head of trading at Investec Australia.
Heathcote, who said the dollar remained gold's key driver,
was optimistic about gold's future price prospects.
"I think ultimately, unless we see some kind of negative
fallout again from the financial sector, the hopes are good for a
continued recovery in metal prices and gold to benefit further,"
he said.
The euro rose on Wednesday as investors bought it back after
steep falls against the dollar and yen this week, but the market
struggled for clear direction as it tried to decide if a dollar
recovery had run its course. [USD/]
Currency market volatility and waning confidence in paper
money has also helped buoy gold as the precious metal is seen as
a hedge against inflation, which erodes the value of paper
assets.
A summit of the so-called BRIC nations -- Brazil, Russia,
India and China -- ended on Tuesday with the participants
demanding a clear say in the global financial system, although
they steered clear of an assault on the dollar's reserve status.
[ID:nLG674351]
The meeting had attracted the market's interest after a
Russian official said the currency issue would be raised, which
could have had a significant impact on the dollar, a key factor
to move the gold market.
U.S. gold futures for August delivery GCQ9 were at $933.30
an ounce, up 0.1 percent.
In a mark of sluggish interest among long-term investors, the
world's largest gold-backed exchange-traded fund, the SPDR Gold
Trust (GLD), said its holdings stood at 1,132.15 tonnes as of
June 16, unchanged for an eighth business day. [GOL/SPDR]
Some market watchers say gold seems overvalued, its upside
limited by the near-term risk of deflation.
Economist Nouriel Roubini, who predicted the global financial
crisis, said gold looks overextended as deflation is likely to
outweigh any risks of inflation in the near term. [ID:nN16291653]
"For the next two years deflationary pressure is going to be
dominant, and it is going to become a time bomb down the line if
and when we keep monetising large deficits. It may be too soon to
hedge with gold," he told the Reuters Investment Outlook Summit
in New York.
Precious metals prices at 0633 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 936.45 2.35 +0.25 12.46
Spot Silver 14.22 0.05 +0.35 -3.72
Spot Platinum 1216.50 1.50 +0.12 -19.97
Spot Palladium 242.00 2.00 +0.83 -34.24
TOCOM Gold 2924.00 27.00 +0.93 -4.44 37478
TOCOM Platinum 3812.00 20.00 +0.53 -28.60 14070
TOCOM Silver 442.10 1.60 +0.36 -18.28 473
TOCOM Palladium 768.00 -7.00 -0.90 -43.15 537
Euro/Dollar 1.3906
Dollar/Yen 96.65
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
(Additional reporting by Risa Maeda)
