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Gold falls near $1,100 mark Add to ...

Gold hit its lowest price in nearly two weeks Wednesday, falling toward $1,100 (U.S.) an ounce on heavy futures liquidation and as safe-haven buying on Greek sovereign debt worries subsided.

After rising almost $20 last week, gold has already dropped by $27 this week as traders take profits. Speculators had been increasing their net long position in gold for four straight weeks but they may now be trimming those positions, putting selling pressure on the yellow metal, traders said.

The latest Commitment of Traders report by the U.S. Commodity Futures Trading Commission showed net long noncommercial gold futures positions at 207,372 contracts, up 3.4 per cent from the prior week and up 14 per cent during the last four weeks.

"We saw some liquidation on futures again, with more than 1 million ounces being sold," said Christophe Jacot, vice-president of FX and precious metals at EFG Bank.

Spot gold hit a low of $1,102.85 earlier in the session, the weakest since Feb. 25. It was at $1,108.15 an ounce at 3:10 p.m. ET, against $1,121.15 late in New York on Tuesday.

U.S. gold futures for April delivery on the Comex division of the New York Mercantile Exchange settled down $14.20, or 1.3 per cent, at $1,108.10 an ounce in heavy trade.

Gold weakened despite a stronger euro after Greece said in a report it is ahead of schedule with plans to tame its budget deficit, and there has been no slippage in moves to rein in spending.

However, persistent worry over the euro zone's fiscal health could still lend support, analysts said.

"It looks like there is still some safe-haven money [coming in]" said Deutsche Bank trader Michael Blumenroth.

Fitch Ratings said on Tuesday it still has a negative outlook on Portugal's credit rating, which heightened concern that peripheral euro zone economies may face debt problems similar to those of Greece.

"All the worries about the fiscal situation, and how that is managed, are being read as positive for gold," said Credit Agricole analyst Robin Bhar.

"That should become a long-standing issue, as people are concerned about how governments in the euro zone are handling the whole fiscal situation."

Platinum dropped on broad-based metal weakness. Earlier in the session, the metal rose more than 1 per cent to its highest price in seven weeks due to strong Japanese buying in Asian trade.

South Africa's mines minister, Susan Shabangu, told the Reuters Global Mining and Steel Summit in New York that the country has sufficient power this year and expects to have sufficient power during the soccer World Cup in June. She said the blackouts that crippled the mining industry in early 2008 would not be repeated this year.

Platinum group metals are also being underpinned by rising investment demand after the launch of platinum- and palladium-backed exchange-traded products in New York earlier this year by a U.S. subsidiary of London's ETF Securities.

Both products saw inflows Tuesday. Holdings of ETFS Physical Platinum Shares rose nearly 10,000 ounces to 289,610 ounces, while those of ETFS Physical Palladium Shares climbed nearly 15,000 ounces to 504,511 ounces.

Platinum was at $1,588.50 an ounce against $1,589, while palladium was at $461 against $465. Spot silver was at $16.94 an ounce against $17.23.

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