July 26, 2007	Thursday	Rajab 10, 1428

LONDON, July 25: Gold fell nearly 1 per cent on Wednesday as a recovery in the dollar and softer oil prompted investors to take profits from the metal's 11-week highs. Gold slipped as low as $676.10 an ounce and was quoted at $678.05/678.65 against $682.60/683.40 in New York late on Tuesday, when a record-low dollar propelled gold to as high as $687.10.

The dollar remains the key driver of gold prices, and the currency gaining substantial strength this morning has taken its toll on gold and in turn, prices have eased, said Suki Cooper, precious metals analyst at Barclays Capital.

In the near term, the dollar is likely to support prices but not necessarily provide the catalyst gold needs to challenge key resistance levels, she said.

The dollar rebounded from recent record lows versus the euro, benefiting from rising risk aversion as global stocks fell and investors tried to assess whether contagion in the US housing market was spreading.

A weaker US currency makes dollar-denominated metals cheaper for investors in other currencies.

European stocks hit a one-month low after disappointing US earnings results fanned concerns that the US mortgage sector's malaise may hurt the broader economy.

US stocks suffered their worst one-day performance since March on Tuesday after DuPont and Countrywide Financial Corp posted a slump in profits, citing the housing downturn.

Gold could suffer under the flight from risky assets into the safe haven of government bonds, Dresdner Kleinwort said.

Gold also came under pressure because of oil prices, which fell for a fourth day on forecasts of higher refinery production in the United States.

Oil appears to have lost some of its momentum, and it follows that there should be some profit-taking in gold, said Takashi Ogura, a manager at Kanetsu Asset Management.

A drop in bullion prices lifted physical gold demand in India, the world's largest consumer of the metal. The country's busy buying season starts in August and demand is likely to be good until December, as the period witnesses several Hindu festivals and marriages, dealers say.

In other metals, platinum fell to a one-week low of $1,316/1,320 from $1,320/1,325 in New York, while silver fell as low as $13.09, the lowest since June 18. It was last quoted at $13.19/13.23, versus $13.28/13.33.—Reuters