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Gold near 2-week low, steady dollar cap gains


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Mar 25, 2010
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PRECIOUS-Gold near 2-week low, steady dollar cap gains

* Bullion has fallen in five out of past six sessions
* Coming up: U.S. wholesale inventories at 1400 GMT

(Updates throughout, changes dateline from MANILA)
By Clara Denina
LONDON, May 10 Gold steadied just above a near
two-week low on Tuesday, after its steepest loss since March in
the prior session, but a steadier dollar curbed appetite for the
precious metal.
Bullion has fallen in five out of the past six sessions,
failing to fully benefit from data last week showing that the
U.S. economy added the fewest jobs in seven months in April.
Spot gold was up 0.2 percent at $1,265.35 an ounce by
0957 GMT, after hitting an early low of $1,259.51, its weakest
since April 28. Bullion fell 1.9 percent on Monday, its sharpest
single-day drop since March 23.
U.S. gold for June delivery was up 0.1 percent
at$1,268 an ounce.
Spot prices are still up 19 percent this year as
expectations for a near-term increase in U.S. interest rates
ease. Higher rates would bolster the dollar, while lifting the
opportunity cost of holding gold.
"The drivers that have lifted gold prices still remain
largely intact, including the continuous wavering of the Fed in
terms of the rate increases and the softening of the dollar,
which introduced a layer of uncertainty in investors' mindsets
that tends to support the precious metal," said Nitesh Shah, ETF
Securities director of commodity research.
The dollar was unchanged against a basket of major
currencies, after drifting to its highest in nearly two
weeks. The U.S. currency tumbled to an 18-month low versus the
yen last week after the Bank of Japan stood pat on monetary
"We remain longer term relatively positive but believe we
are entering a corrective phase that may take prices closer to
the $1,220 level near term," HSBC said in a note.
Physical demand for gold in China is uncertain and
consumption in India is "sluggish at best", HSBC said on
appetite in the top two bullion consumers.
Indians bought a third less gold than last year during the
annual Hindu and Jain holy festival of Akshaya Tritiya on
Monday, industry officials estimate, as droughts have hit the
earnings of millions of farmers and the metal's price rallied.

Silver rose 1.1 percent to $17.55 an ounce, platinum
was up 0.6 percent at $1,063.70 and palladium gained 1.2 percent
to $604.50.

(Additional reporting by Manolo Serapio Jr.; Editing by Susan