Gold falls nearly 1 pct on oil, silver off 31-year peak

Gold slipped nearly 1 per cent on Tuesday, hovering below a record high and silver was off a 31-year peak hit in the previous session after long-term commodity bull Goldman Sachs advised investors to lock-in trading profits before oil and other markets reverse. But a weaker dollar could cushion the fall as two top U.S. Federal Reserve officials, Janet Yellen and William Dudley, said the central bank should stick to its super-easy monetary policy, with inflation not a threat and unemployment too high. Spot gold fell $12.05 an ounce to $1,454.70 an ounce by 0317 GMT. Bullion struck a lifetime high above $1,476 an ounce on Monday on the prospect of a weaker dollar. "Some people may take profits and reduce positions. Everybody knows that Goldman Sachs recommends to reduce positions. That's why the market is a bit scared," said Dick Poon, manager of precious metals at Heraeus in Hong Kong. "I think sentiment is still bullish. It's still consolidating right now." Physical dealers in Hong Kong and Singapore said sales of scrap were limited despite gold's recent rise to a record high, suggesting that holders were still waiting for more gains before cashing in. Spot gold may end the current retracement around $1,444 per ounce and resume its uptrend thereafter, according to Wang Tao, who is a Reuters market analyst for commodities and energy technicals. Goldman Sachs told its clients there is a strong chance of key commodity prices reversing and recommended they take profits, triggering declines in oil prices as worries about falling demand escalated. Goldman noted "nascent signs of oil demand destruction in the United States" that could drag prices down, as well as the possibility of a Libya ceasefire. Nigeria's elections, which had added further risk to oil markets, had thus far not caused supply disruptions, it added. "Some investors are using the Goldman Sachs recommendation as a reason to take profits. I would put the support level at around $1,450 level and of course, it is breached, we could see a much sharper retracement all the way to about $1,430 or even less than that," said a dealer in Singapore. "I think the fundamentals for gold remain strong. This is just profit taking after a huge run-up. The outlook for the dollar is also still shaky." Concerns about inflation remain, traders said. The International Monetary Fund on Monday said soaring oil prices and inflation in emerging economies pose new risks to global recovery but are not yet strong enough to derail it. U.S. gold futures for June dropped $12 an ounce $1,456.1 an ounce. In other markets, the euro retreated from Friday's 15-month high around $1.4485 to $1.4435, but traders say the January high of $1.4582 remains in play. Tokyo stocks fell 1.6 percent on growing worries the impact of the March 11 earthquake and tsunami may be more severe that originally expected. Source: www.economictimes.indiatimes.com Thanks, Gaurav Agarwal Head Dealer DENIP Consultants Pvt Ltd