>Spot gold steady but risks for lower price

London - Spot gold is trading steady Tuesday in Europe after the drop at the start of the week, and traders and analysts said the risk in the short term is for more selling in gold due to the large number of long positions.

Net long positions in traded gold gained sharply recently and, due to the absence of physical buyers, that speculative trade makes it "increasingly dangerous to hold gold or enter the market at these levels," said VTB Capital commodity analyst Andrey Kryuchenkov.

He said the rise in gold last week was due primarily to weakness in the dollar and speculative trade, which makes the metal vulnerable to bouts of liquidation.

The dollar was mildly weaker against the euro Tuesday but remained generally strong. European stocks were higher at the open. The market will watch the comments surrounding the U.S. Federal Reserve meeting beginning Tuesday with an interest rate decision due Wednesday.

At 0848 GMT, spot gold was trading at $947.35 a troy ounce, up 0.3% from Monday's close. Spot silver was at $14.46/oz, up 1.1%. Spot platinum was at $1,250/oz, up 0.5%. Spot palladium was at $270/oz, down 0.7%.

Immediate support for gold is at $940/oz and $945/oz, VTB's Kryuchenkov said. Some consolidation should occur, unless the dollar strengthens further, in which case the price could fall to $925/oz in the near future, he said.

"The risk is lower near term in gold," Barclays Capital said.

Support for gold is around $937/oz and then $921/oz, but if the precious metal trades towards that support, it will attract fresh demand, Barclays Capital said.

UBS said it maintains its one-month gold price forecast at $950/oz.

Longer term, Goldman Sachs said prices will remain around current high levels, consistent with a supportive low real-rate environment.

The SPDR Gold Trust exchange traded fund holdings fell further, down 0.35 metric tons to 1,068.55 tons as of Aug. 10.

Source: COMMODITIESCONTROL