Gold recovers in London; further losses on the card

Gold recovered from earlier losses on Tuesday but analysts expect the generally higher dollar to weigh on sentiment and possibly trigger a further sharp sell-off. Spot gold was bid at $990.10 a troy ounce at 1432 GMT from $989.95 late in New York on Monday. Earlier it hit $984.90, not far from Friday's $984.70, the lowest since September 10.
Gold recovered some poise as the dollar slipped after an unexpected fall in US consumer confidence in September, but overall the precious metal remains under pressure, analysts said. US gold futures for December delivery were down $2.4 to $991.7 per ounce. Gold prices are up more than 10 percent so far this year, with the most recent leg higher driven by dollar weakness, technical momentum and concerns about potential inflation.
The non-commercial net long position - buying to profit from further gains - in gold futures on the COMEX division of the New York Mercantile Exchange stood at an all-time high of 236,749 lots for the week ended September 22. "These (long positions) make the metal vulnerable to the downside, if upside momentum slows down further and weak longs start liquidating," said Alexander Zumpfe, senior precious metals trader at Heraeus in Germany.
Bullion rallied to an 18-month high of $1,023.85 an ounce earlier this month, just a few dollars shy of the March 2008 record high of $1,030.80. "A certain hesitancy has emerged amongst fast money to buy gold ... due to fears of excess long positioning in COMEX, concerns about the sustainability of both dollar weakness and the broader trend of risk asset strength," UBS said in a note.
On the investment front, the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said its holdings stood at 1,094.107 tonnes as of September 28, unchanged since September 24. In other precious metals silver stood at $16.13 per ounce, down from $16.14 quoted late in New York on Monday. Spot palladium was bid at $286.00, flat from late New York levels on Monday, while platinum was at $1,272, down from $1,273.50.