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U.S. gold turns lower early on profit taking
NEW YORK, Oct 16 (Reuters) - Gold futures fell in back-and-forth trade early Tuesday as initial support from rising crude prices and follow-through buying in the Asian markets diminished as bullion investors locked in recent profits.
"We seem to be under a little pressure again. But the market's stable, with some fund buying again, and just some profit-taking keeping the market from climbing," said Carlos Perez-Santalla, a floor trader for Hudson River Futures in New York.
At 10:32 a.m. EDT (1432 GMT), most-active December gold GCZ7 on the COMEX division of the New York Mercantile Exchange was down $1.40 at $760.80 an ounce.
In early electronic trade, December gold rose as high as $772 an ounce, boosted by a spike in crude prices and robust buying by Japanese investors triggered by a higher yen versus the dollar, Perez-Santalla said.
The December contract hit a session low of $759.30.
Earlier on Tuesday, U.S. crude CLc1 surged more than $2 to a record $87.97 a barrel on tight supplies, strong demand and tension in northern Iraq because of a possible Turkish military operation against Kurdish rebels there.
Oil later retreated but held above $86 a barrel by midmorning.
"As long as oil trades above $85 a barrel without damaging the global growth (at higher prices), gold would continue to gain on inflationary fears," Pradeep Unni, assistant vice president of Vision Commodities in Dubai, said in a client note.
However, Unni said, if the Federal Reserve postponed further rates cuts, gold would suffer because of a rising dollar.
The dollar fell against the yen and pared earlier gains against the euro on Tuesday after a report showed a sharp outflow of funds from the United States in August.
Selling in the U.S. currency against the yen started in Asian trading and picked up after the U.S. Treasury said the country registered a record net $163 billion outflow in August.
On central-bank gold sales, gold and gold receivables held by euro zone central banks fell by 108 million euros to 185.975 billion euros in the week ending Oct 12, the European Central Bank said on Tuesday. Gold holdings fell because of sales by two euro zone central banks.
In investment news, India's largest mutual fund, Reliance Capital Asset Management Ltd, launched an exchange-traded fund that would invest in physical gold. [ID:nBOM251499]
Sources told Reuters that the Shanghai Gold Exchange <SGE/MENU>, China's largest precious metals bourse, will launch forward gold contract trading for retail investors, after failing to get approval for futures trading. [ID:nSHA312045]
Spot bullion XAU= was quoted at $755.40/756.20, down from the New York Monday close at $758.20/759.00. London bullion dealers fixed the afternoon spot reference price at $756.75.
Platinum futures dropped, despite supply concerns due to possible work stoppage by South African mine workers.
South Africa's Solidarity union said wage talks with platinum producer Lonmin (LMI.L)(LONJ.J) had bogged down after it rejected the company's latest offer, but added there were no imminent plans for a strike. [ID:nL16214923]
Last week, South Africa's biggest mining union, the National Union of Mineworkers, said it planned to hold a one-day protest against deaths and accidents at mines.
NYMEX January platinum PLF8 was down $18.40 or 1.3 percent at $1,405 an ounce. Spot platinum was quoted at $1,408/1,412.
December palladium PAZ7 dropped $10.15, or 2.7 percent, to $367 an ounce. Spot palladium XPD= fetched $368/372.
COMEX December silver SIZ7 was down 15.5 cents, or 1.1 percent, at $13.70 an ounce, trading between $13.60 and $14.09.
Spot silver XAG= was quoted at $13.59/13.64, which was lower than Monday's late New York quote of $13.77/13.82. London silver was fixed at $13.66.
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