* Dollar extends gains after above-consensus U.S. PPI data
* Platinum edges up from 11-month low but stays in red
(Recasts, adds comment, updates prices)
By Jan Harvey
LONDON, Aug 19 (Reuters) - Gold fell on Monday as the dollar
extended gains against the euro after U.S. inflation data came
in higher than expected, while platinum held just off an
11-month low of $1,296.50 hit in Asian trade.
Gold was at $790.50/791.50 an ounce at 1335 GMT against
$799.65/801.05 late in New York on Monday, having earlier hit a
session low of $782.05.
Despite the pick-up in the dollar, the precious metal ran
into good technical support at $775 an ounce, analysts say,
while demand from jewellers, which suffered earlier in the year
as prices rose, is picking up.
"We are seeing extremely strong jewellery demand over the
last week, much stronger than I have seen before," noted UBS
analyst John Reade.
Nonetheless the firm dollar, which has dented gold's appeal
as an alternative investment, is keeping prices under $800. A
resurgence in the U.S. currency has been a key factor in
pressuring all the precious metals lower in recent weeks.
The dollar rose to a six-month high against the euro and its
strongest level this year against a basket of currencies on
Monday, on ongoing fears over global economic growth.
It extended those gains after the U.S. producer price index
came in stronger than expected. []
A weakening in the oil prices is also weighing on the
precious metal, reducing the attraction of gold as a hedge
against inflation.
Oil slipped towards $112 a barrel after a tropical storm in
the Gulf of Mexico, which it was feared would affect oil
installations there, passed without major disruption.
[]
"The combination of the dollar strengthening and softer oil
prices have kept gold prices under pressure," Barclays Capital
analysts said in a note.
PLATINUM GROUP SLIDES
Platinum and palladium came under pressure from fears
slowing economic growth could dent demand from the automotive
industry, which consumes more than half of the world's platinum.
Both metals remain lower after dropping more than 6 percent
in Asia, with benchmark Tokyo platinum futures falling by their
daily limit to a one-year low, as traders worried about the
outlook for demand from carmakers.
"Platinum closed in New York last night around $1,390 and
this morning we hit a low below $1,300," said Afshin Nabavi,
head of trading at MKS Finance. "That was the main reason for
everything else coming off quite sharply."
Spot platinum <XPT=> was at $1,316.00/1,336.00 at 0953 GMT
against $1,386.00/1,406.00 an ounce late in New York, having
earlier touched a session low of $1,296.50, its weakest level
since Sept 2007.
Investment bank Investec cut its third-quarter price target
for platinum on Tuesday to $1,660 an ounce from $2,050 an ounce,
and sliced its full-year market deficit to 194,000 ounces.
[]
Among other precious metals spot palladium <XPD=> fell to
$275.00/283.00 an ounce from $283.00/291.00 an ounce.
Silver <XAG=> slipped to $12.90/12.96 an ounce from
$13.07/13.13 an ounce, having earlier touched a low of $12.45.
(Reporting by Jan Harvey; editing by Christopher Johnson)
