Gold extends losses on China growth worry

SINGAPORE (Reuters) - Gold fell on Tuesday, extending losses seen in the previous session after China set a slower economic growth target for the year, but hopes that cheaper bullion would prompt a pickup in purchases reined in losses.

Prices have also been supported by the ongoing debt crisis in Europe, which has strained the region's economy and polished gold's safe-haven appeal.

"The euro crisis has prompted everyone into buying gold, while new demand from China and India has kept the physical market tight," said Pradeep Unni, senior analyst at Richcomm Global Services in Dubai.

"For now, because of the euro zone crisis and then the Iranian nuclear conflict, gold is overpriced versus other commodities," he said.

Gold eased 0.3 percent to $1,700.91 an ounce by 0750 GMT, recovering from an intraday low around $1,698. It fell 1 percent on Monday after China cut its 2012 growth target to an eight-year low of 7.5 percent.

U.S. gold for April delivery slipped 0.12 percent to $1,701.80 an ounce.

Spot gold tumbled nearly 4 percent last week -- its worst weekly performance since mid-December -- after Federal Reserve Chairman Ben Bernanke gave no further hints of any imminent U.S. quantitative easing.

"A lot of gold investors are still affected by the large sell-off last week. Many are looking at the technical charts, where gold may come down further before it goes up," said Lynette Tan, an analyst with Phillip Futures in Singapore.

"I think it's very strongly supported at the 200-day moving average. I think in the longer-term, of course, we are looking at China to become the top buyer of gold."

Gold's 200-day moving average currently stands at around $1,676 an ounce.

Chinese buying, record investment and 40-year high central bank purchases helped propel gold demand to 14-year highs in 2011, the World Gold Council said.

Some dealers said the market need not be too worried about Beijing's latest move to trim growth targets and that bullion's demand as a hedge against inflation is expected to stay strong.

"Customers are happy to buy at the current level, although things have slowed down a bit. I guess they could buy more if prices fall further," said a physical dealer in Singapore.

In Europe, Greece and its creditors are in the final stages of talks aimed at a deal that would cancel more than 100 billion euros of its private sector debts - a key part of a 130 billion euros bailout, the second rescue Athens has required.

Source: http://news.yahoo.com/gold-extends-losses-china-growth-worry-091030687.html

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