Gold falls

Gold edged lower on Monday after President George W. Bush's plan to give the US economy temporary tax cuts and other measures totalling about $150 billion failed to inspire buying.
Gold prices may have entered a corrective phase after surging to a record high of $914 an ounce last week, but the precious metal could be supported due to weakness in the dollar and uncertainty in financial markets as stock prices slump.
Spot gold was at $878.25/879.25 an ounce, down from $881.90/882.60 in New York on Friday. "Gold has surged to a record high in a very short period of time and now the market could be in a corrective phase," said Tatsuo Kageyama, an analyst at Kanetsu Asset Management in Tokyo.
"Uncertainties are still there in the financial markets even after the US economic stimulus plan. A further slump in stock prices could trigger profit-taking in gold."
Gold hit the record high of $914 on January 14. Gold's drop from the record high was partly driven by selling from investors and funds to cover margin calls from losses in stock markets amid fears of a recession in the United States. Spot gold was capped at the five-day moving average of $882 and the 10-day average of $886.
Kageyama said important support would be around $850, which is close to the 25-day average of $851, but gold could be supported as physical buyers from China, India and the Middle East are expected to emerge.
Traders said the market's focus would be on a US Federal Reserve meeting on January 29-30. Spot gold was pressured as the key distant Japanese gold futures were weighted down. The benchmark December contract on the Tokyo Commodity Exchange closed the trade at 3,050 yen a gram, down 1 yen from Friday's close.
Comex gold futures fell in Asia after closing slightly higher in New York on Friday. The most active February contract was trading down $1.9 or 0.2 percent at $879.8 from its New York settlement.
Platinum edged down to $1,553.50/1,558.50 an ounce from $1,556/$1,561 on Friday. TOCOM platinum advanced, but technical trend stayed weak after losing 4 percent last week. The key TOCOM platinum contract closed the morning session down 14 yen or 0.3 percent at 5,225 yen a gram. Palladium edged up to 369/373 an ounce from Friday's US levels of $367/$372, while silver fell to $16.06/16.11 an ounce from $16.14/16.19 late in New York.