November 6, 2014 / 4:26 AM / 5 years ago

PRECIOUS-Gold ticks up as dollar eases, but still near 4-1/2 year low

* Gold, silver trade near 2010 lows
    * Dollar index slips from four-year high
    * Coming up: Outcome of ECB policy meeting at 1245 GMT

 (Adds analyst comment, dollar move)
    By A. Ananthalakshmi
    SINGAPORE, Nov 6 (Reuters) - Gold edged up slightly on
Thursday as the dollar took a breather after a sharp rally, but
the safe-haven metal continued to languish near its lowest level
since April 2010 with fears mounting that $1,000 an ounce is the
next target.
    The sell-off in gold began last Friday when the metal broke
through $1,180 - the lowest level hit during last year's 28
percent plunge. Since then, dollar strength and breaks below
other technical levels have built the case against gold.
    Many see the dollar's drop on Thursday as only a blip and
expect the greenback to continue to strengthen as the Federal
Reserve looks likely to increase interest rates sooner rather
than later, and on robust economic data. 
    Before today's losses, the dollar hit a four-year high
against a basket of major currencies on Wednesday, boosted by
last week's surprise move by the Bank of Japan to expand its
stimulus measures, and after Republicans won control over both
chambers of the U.S. Congress. 
    "Don't try to catch a falling knife," ABN Amro analyst
Georgette Boele said regarding gold prices. "The U.S. dollar
rally has further to run especially if the Fed turns more
hawkish this year."
    ABN Amro says gold could drop to $1,100 by year-end, and
$800 by the end of next year. 
    Spot gold ticked up 0.3 percent to $1,144.10 an ounce
by 0728 GMT. It tumbled over 2 percent to a 4-1/2 year low of
$1,137.40 on Wednesday, following sharp losses after falling
through support at $1,160 and $1,150.
    Technical analysts have said a test of the $1,000 level
could be on the cards following a break of support at $1,154 an
ounce, a key retracement level. 
    Silver, under pressure from the dollar and sliding gold, was
trading close to its lowest since February 2010 of $15.13, after
losing 4 percent in the previous session. Platinum fell
below $1,200 briefly but recovered. 
    Other than the dollar strength, analysts were concerned
about the lack of robust demand in China. The top consumer of
the metal typically buys a lot of jewellery, bars and coins
whenever prices fall, providing a floor to down markets, but
that hasn't happened this time around. 
    "There seems to be little interest from Chinese dealers in
physical gold. The inability of premiums to rally significantly
despite the sharp decline in the gold price is telling," said
ANZ analyst Victor Thianpiriya.
    Prices on the Shanghai Gold Exchange were trading at a
discount or on par with the global benchmark on Thursday. They
have been at a discount for most of this week, hinting at
sluggish demand.
    India, the second biggest buyer, hasn't seen any fresh
buying either at lower price levels. 
    "One of the possible explanations of such a lack of physical
support could be that investors are waiting on the sidelines for
further pullbacks in the price or price stability," Societe
Generale analyst Robin Bhar said. Weakness in local currencies
could also be a factor, he said.    
    Traders are awaiting the U.S. nonfarm payrolls report on
Friday, which they think could turn out to be another key
trigger for gold. A strong report could boost the dollar and
dull bullion's safe-haven appeal even further.
    They were also eyeing the European Central Bank policy
meeting later in the day for currency movements.
    PRICES AT 0728 GMT
 Metal            Last      Change   Pct chg
 Spot gold          1144.1     3.14      0.28
 Spot silver         15.32    -0.02     -0.13
 Spot platinum      1201.5    -2.25     -0.19
 Spot palladium      755.2      0.9      0.12
 Comex gold         1143.9     -1.8     -0.16
 Comex silver       15.335   -0.104     -0.67
 Euro               1.2514                   
 DXY                87.241                   
 COMEX gold and silver contracts show the
 most active months
 (Editing by Tom Hogue and Biju Dwarakanath)
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