* Platinum, palladium fall more than 4 pct as investors sell
* Gold bounces from 1-month low as dollar weakens
* Obama plan to curb banks' risk-taking spooks commodities
(Updates prices, adds analysts' comments)
By Jan Harvey and Rebekah Curtis
LONDON, Jan 22 (Reuters) - Gold rose on Friday on a weaker
dollar, bouncing from a one-month low hit earlier on concerns
tough new proposals by President Barack Obama to limit banks'
risk-taking may curb investment flows into commodities.
Spot gold <XAU=> hit a one-month low of $1,081.90 and was at
$1,095.30 an ounce at 1650 GMT, against $1,094.20 late on
Thursday.
The dollar slipped as investors pared back riskier trades in
the wake of Obama's proposals. [] A weaker U.S.
currency makes dollar-priced commodities cheaper for holders of
other currencies. []
"We're seeing a rally in the euro which is helping gold a
bit higher. Earlier the market was liquidating, partly because
of a stronger dollar and partly because of President Obama's
speech yesterday, said Afshin Nabavi, head of trading at MKS
Finance.
Strategists and fund managers said Obama's plans, to
restrict banks or financial institutions from investing in,
owning, or sponsoring a hedge fund or a private equity fund,
could constrain fund flows into commodity markets.
"The reaction was a bit out of proportion," Nabavi said of
the market's reaction to Obama's proposed regulations.
"When it takes place it would take away a bit of liquidity
from the market but I don't think it will have a huge effect."
PLATINUM, PALLADIUM DROP
Platinum and palladium prices fell more than 4 percent, also
mirroring concern that the metals' run-up to their highest level
since mid-2008 this week after the launch of new U.S. investment
products, may have been overdone.
Spot platinum <XPT=> was at $1,546 an ounce against $1,593
an ounce late in New York on Thursday, having earlier touched a
low of $1,518, its weakest since Jan. 6.
Palladium <XPD=> hit a one-week low of $423.50 an ounce, and
was later at $438 an ounce against $449.
The launch of physically-backed platinum and palladium
exchange-traded funds in New York earlier this month lifted
prices as it boosted investment interest.
"It's not surprising to see a correction. The run up was so
strong over the last weeks due to the high investment demand,"
said Eugen Weinberg, an analyst at Commerzbank.
"But this correction presents a buying opportunity in the
longer term," he added.
Around half of platinum and palladium demand comes from the
auto sector, with carmakers using the metals in the manufacture
of catalytic converters.
Palladium had been the year's best performer among precious
metals, up 16 percent at its 2010 high of $471.75.
"Palladium had outperformed going up and is suffering a
delayed reaction," said Mitsubishi Corp precious metals
strategist Tom Kendall. "It doesn't have the same degree of
support from buyers of physical as does platinum."
Indian gold buyers continued to take advantage of lower
prices on Friday, with more buying expected if bullion continues
to fall.
"Traders mostly will look at buying below $1,070," said a
dealer with a private bank in Mumbai. []
Investment demand was lacklustre, with holdings of New
York's SPDR Gold Trust <GLD> exchange-traded fund unchanged for
a second session on Thursday. []
Silver <XAG=> hit its lowest since Jan. 4 at $16.83 and was
later at $17.09 an ounce versus $17.35.
(Editing by Anthony Barker and Sue Thomas)
