* Dollar climbs after Fitch downgrades Greece credit rating
* HSBC lifts 2009, 2010 gold price forecasts
* Chinese November car sales almost double
(Updates prices)
By Jan Harvey
LONDON, Dec 8 (Reuters) - Gold prices dropped more than 1
percent on Tuesday to a session low of $1,142.30 an ounce, with
risk aversion fuelling broad dollar gains after ratings agency
Fitch downgraded Greece's credit rating.
Spot gold <XAU=> was bid at $1,149.85 an ounce at 1653 GMT,
against $1,156.90 late in New York on Monday. In that session it
fell to a two-week low of $1,135.80, having touched a record
high of $1,226.10 just last week.
The dollar strengthened against the euro, with the single
currency feeling the pinch as investors worried about Greece's
fiscal health after Fitch downgraded the euro zone member's
credit rating. []
Traders attributed gold's decline in the last three sessions
from record highs to a recovery in the dollar after better than
expected U.S. non-farm payrolls data for November lifted hopes
that the world's biggest economy may be stabilising.
"What happens to gold from here will be determined by two
factors -- whether we see a continued recovery in the dollar,
and whether the recent concerns over the creditworthiness of the
major sovereign countries continue to subside," said Nic Brown,
senior analyst at Natixis.
Strength in the U.S. unit dents gold's appeal as an
alternative asset and makes dollar-priced commodities more
expensive for holders of other currencies.
For a graphic showing gold's correlation with the dollar,
click: http://graphics.thomsonreuters.com/129/GLD_EURCR1209.gif
An unexpected 1.8 percent month-on-month fall in Germany's
industrial output in October also weighed on the euro, while
persistent concerns about Dubai's debt woes pushed investors to
seek the safety of the dollar.
Commerzbank analyst Eugen Weinberg said gold was vulnerable
to a further recovery in the U.S. currency.
"Should the dollar strengthen in the coming days, it would
be very difficult for gold prices to hold at current levels,
because it would take one of the most important arguments (for
buying gold) away from the market," he said.
U.S. gold futures for February delivery <GCG0> on the COMEX
division of the New York Mercantile Exchange fell $12.90 to
$1,151.10 an ounce.
FORECASTS RAISED
HSBC raised its gold price forecasts for 2009 to $990 an
ounce from $925 previously, and said it sees prices at $1,150 an
ounce next year, against $950 previously.
"Ongoing accomodative U.S. monetary and fiscal policies may
lend further support to gold," the bank said in a note.
Elsewhere, an official Chinese newspaper said on Tuesday
China should increase the proportion of gold in its foreign
exchange reserves to ensure the safety of its overall portfolio.
[]
Expectations for further central bank diversification into
gold is supporting investment in the metal, analysts said, and
the recent price dip may encourage this.
Among other precious metals, silver <XAG=> was bid at $17.92
an ounce against $18.16, platinum <XPT=> at $1,441 an ounce
against $1,438.50 and palladium <XPD=> at $373.50 against $371.
Traders in autocatalyst materials platinum and palladium are
looking for fresh signs of recovery in the beleaguered
automotive market for clues as to the future strength of demand.
Official data on Tuesday showed China's passenger cars sales
in November rose 98 percent from a year earlier. []
(Editing by Anthony Barker)
